Cleophas L. Cox and Rose M. Cox v. Manuel Chaco, Director of Revenue and Taxation, and Government of Guam

concurring:

The district court’s finding that Cox failed to satisfy the third element required for exclusion of the value of lodging under section 119 is not clearly erroneous, and I agree with Judge Choy that the decision below should be affirmed on that basis. I write separately to make clear that I harbor no misgivings about whether, as a general proposition, section 119 would ever apply to Cox’s situation. The applicable Treasury regulation, Treas.Reg. § 1.119-l(b), states plainly that section 119 applies under the circumstances present here. The Supreme Court’s Kowalski decision does not impair the validity of that regulation.

Treas.Reg. § 1.119-l(b) states, in pertinent part:

The emphasized portion of the regulation was promulgated in response to the decision in Boykin v. Commissioner, 260 F.2d 249 (8th Cir. 1958), in which the court examined the applicability of § 119 to a situation quite similar to that of the instant case. Boykin recognized that no difference exists between Taxpayer A, who receives a salary of $10,000 along with $5,000 worth of lodging at no charge, and Taxpayer B, who receives a salary of $15,000 from which $5,000 is deducted for the same lodging.…

Cleophas and Rose Cox, taxpayers, petition from a judgment of the district court *175 denying their claim for a tax refund. We find that the district court correctly held that the taxpayers could not exclude certain rental payments from their gross income, and accordingly we affirm the judgment below.

I. FACTS

Mr. Cox was an employee of the Federal Aviation Administration (“FAA”) during the relevant tax year. He was assigned to the Guam region and he and his family lived in FAA housing there. Cox was the FAA Resident Director for Guam, and his responsibilities included air traffic control and crash investigations, as well as overseeing day-to-day housing matters. He received a standard FAA salary for such a position, and from that salary the Government deducted a portion for rental of Cox’s FAA quarters. Thus Cox never physically handed over his rent payments to the FAA and his take-home pay did not include the amount allocated to rent.

Cox’s home is eight-tenths of a mile from his office. Both the home and office are within the FAA complex. Cox testified that he would not be able to manage the FAA complex “long distance” and that his job required his physical presence in the…

concurring:

While I concur in the result, I cannot agree that § 119 is applicable to this situation. As the Supreme Court held in Commissioner v. Kowalski, 434 U.S. 77 , 98 S.Ct. 315 , 54 L.Ed.2d 252 (1977) and as the Guam Director of Taxation ruled here, § 119 has no application except to benefits received in kind.

One who receives, as compensation, living accommodations, in addition to money, must pay taxes on the value of the living accommodations. Section 119 permits the exclusion from income of the value of the living quarters if specified conditions are met.

Cox received only a salary. He received no in kind compensation. Section 119 having no application to his situation, there is no need to consider whether he satisfied any of its conditions.

650 F.2d 174 81-1 USTC P 9199 , 81-2 USTC P 9550 Cleophas L. COX and Rose M. Cox, Petitioners-Appellants, v. Manuel CHACO, Director of Revenue and Taxation, and Government of Guam, Respondents-Appellees. No. 78-2208. United States Court of Appeals, Ninth Circuit. Submitted June 11, 1980. Decided Feb. 2, 1981. As Amended on Denial of Rehearing and Rehearing En Banc June 22, 1981. Gerald E. Stinson, Crain & Shoecraft, Agana, Guam, for petitioners-appellants. Roger E. Willmeth, Agana, Guam, for respondents-appellees. Appeal from the District Court for the Territory of Guam. Before CHOY and NELSON, Circuit Judges, and SCHNACKE, * District Judge. CHOY, Circuit Judge: 1 Cleophas and Rose Cox, taxpayers, petition from a judgment of the district court denying their claim for a tax refund. We find that the district court correctly held that the taxpayers could not exclude certain rental payments from their gross income, and accordingly we affirm the judgment below. I. FACTS 2 Mr. Cox was an employee of the Federal Aviation Administration ("FAA") during the relevant tax year. He was assigned to the Guam region and he and his family lived in FAA housing there. Cox was the FAA Resident…