Andrews v. Commissioner

931 F.2d 132 (1st Cir. 1991)

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Nature of the Case

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Facts

Andrews (P) owned Andrews Gunite Company, Inc. which built swimming pools in New England. This was a seasonal business. Beginning in 1964, P established Andrews Farms and began to race and breed horses in New England during the offseason. In 1972, P expanded the Farms to Pompano, Florida. The horse business prospered. By 1975, Farms had 130 horses, and its subsidiary Pilgrim Farms in Florida had 20-30 horses. While in Florida during the racing season, P worked at the racetrack. In 1983, P's son established a pool building business in Florida. P owned 1/3rd of that business and assisted his son in that business but drew no salary. By the time of this trial, the pool business was one of the largest in Florida with offices in West Palm Beach, Orlando and plans to open a third in Tampa. P resided in Massachusetts. During the expansion period of the horse business, P made increasing trips to Florida, and as a result, he purchased a condo. Eventually, he purchased a home in 1983. The Tax Court found that P worked in Florida in his horse business for six months and that P worked in the pool business for six months. P claimed 100% usage on his Florida house and claimed depreciation on the furniture and the house. He characterized these expenses as lodging expenses. The IRS was not amused and disallowed the deductions based on the fact that P spent equal time in each residence and thus had two principal residences. P appealed contending that the tax court erred when it declared that he had two principal residences.