James M. Cambria v. Commissioner
2019 T.C. Summary Opinion 28
| Tax Ct. | 2019Background
- Petitioner James M. Cambria, a U.S. citizen living in Colorado, worked for Academi Training Center, LLC at Camp Dwyer, Afghanistan under a 12‑month contract beginning August 5, 2014.
- He lived and worked on the military base, could not leave for safety reasons, was provided meals and living quarters, and returned to the U.S. once during the year for the birth of his child.
- Petitioner maintained a Colorado residence where his wife and child lived; he kept a Colorado driver’s license, a registered vehicle, and U.S. bank and credit accounts, and his pay was deposited to a U.S. bank with U.S. tax withholdings.
- He filed a 2014 Form 1040 (timely extension; filed January 22, 2016) claiming the foreign earned income exclusion under I.R.C. § 911 via Form 2555‑EZ, reporting 217 days abroad; respondent disallowed the exclusion and issued a notice of deficiency.
- Respondent determined a $3,090 deficiency, a $618 accuracy‑related penalty under § 6662(a), and a $494 addition to tax under § 6651(a)(1); petitioner contested entitlement to the § 911 exclusion and challenged penalties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether petitioner’s income is excludable under I.R.C. § 911 (is tax home in Afghanistan?) | Cambria: He was physically present abroad (330+ days) and worked in Afghanistan, so his tax home was Afghanistan and wages are excludable. | Commissioner: Petitioner’s abode remained in the U.S. (stronger familial, economic, personal ties), so tax home was in U.S.; § 911 exclusion not available. | Court: Abode was in the U.S.; tax home not in Afghanistan; exclusion denied. |
| Whether § 6662(a) accuracy‑related penalty applies | Cambria: (implicitly) relied on return/preparer and exclusion claimed; no persuasive reasonable‑cause showing. | Commissioner: Negligence/substantial understatement supports 20% penalty; penalty approval complied with § 6751(b). | Court: Respondent met production burden; petitioner failed to show reasonable cause or good faith; penalty sustained. |
| Whether § 6651(a)(1) late‑filing addition applies | Cambria: filed after extended due date but offered no reasonable‑cause evidence. | Commissioner: Return filed late (post‑extension); addition applies absent reasonable cause. | Court: Petitioner offered no reasonable‑cause proof; addition to tax sustained. |
Key Cases Cited
- Welch v. Helvering, 290 U.S. 111 (1933) (tax deficiency determinations presumed correct; taxpayer bears burden to prove error)
- United States v. Boyle, 469 U.S. 241 (1985) (failure to file addition applies unless due to reasonable cause, not willful neglect)
- Jones v. Commissioner, 927 F.2d 849 (5th Cir. 1991) (an individual whose abode is in the U.S. cannot be treated as having a foreign tax home)
- Harrington v. Commissioner, 93 T.C. 297 (1989) (analysis of "abode" and U.S. ties for § 911 tax‑home determination)
- Mitchell v. Commissioner, 74 T.C. 578 (1980) (tax home generally is regular or principal place of business under § 162(a)(2))
- Higbee v. Commissioner, 116 T.C. 438 (2001) (Commissioner bears burden of production for accuracy‑related penalties)
- Graev v. Commissioner, 149 T.C. 485 (2017) (penalty assessment must satisfy § 6751(b)(1) approval requirements)
- McMahan v. Commissioner, 114 F.3d 366 (2d Cir. 1997) (reasonable‑cause standard requires ordinary business care and prudence)