Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 68-42

1968-1 C.B. 94

Sec. 217

IRS Headnote

A union member's employment contract covering a season of a specified number of weeks will not, for the purpose of determining whether he is entitled to a deduction for moving expenses, be considered to cover the off-season period by reason of a clause in the union's contract with the employer under which the employer may extend the season for any number of weeks desired. Therefore, if the taxpayer is under contract for a season of less than 39 weeks and he does not secure additional employment, he is not entitled to a deduction for the expense he pays or incurs in moving to the location of his new place of employment.

Full Text

Rev. Rul. 68-42

Advice is requested whether a union member's employment contract covering a season of a specified number of weeks will, for the purpose of determining whether he is entitled to a deduction for moving expenses under section 217 of the Internal Revenue Code of 1954, be considered to cover the off-season period by reason of a clause in the union's contract with the employer under which the employer may extend the season for any number of weeks desired.

The taxpayer, a union member in a seasonal business, was employed under a contract for a season with a duration of 36 weeks in a new principal place of work. The agreement required the taxpayer to be available for duty during the period covered by the contract. Under the union's agreement, the employer was permitted to extend the season for any number of weeks desired, and the taxpayer was obliged to be available for duty during any such extension.

For the tax year in question, the season was not extended and the taxpayer was unable to secure full-time employment in the general location of his new principal place of work during any of the 16 off-season weeks. The taxpayer asks whether the off-season weeks when no work was either required or available could be counted as weeks of full-time employment under section 1.217-1(c)(4) of the Income Tax Regulations, in view of the clause in the union's agreement which permitted the employer to extend the season for any number of weeks desired.

Section 217(a) of the Code states the general rule that a deduction shall be allowed for moving expenses paid or incurred during the taxable year in connection with the commencement of work by the taxpayer as an employee at a new principal place of work. Section 217(c) of the Code restricts this rule by providing, in part, that no deduction for moving expense is allowable unless, during the 12-month period immediately following his arrival in the general location of his new principal place of work, the taxpayer is a full-time employee, in such general location, during at least 39 weeks.

Section 1.217-1(c)(4)(iii) of the regulations provides that in the case of occupations where  employment is on a seasonal basis, weeks occurring in the off-season when no work is required or available (as the case may be) may be counted as weeks of full-time employment only if the employee's contract or agreement of employment covers the off-season period and the off-season period is less than 6 months.

The taxpayer in this case was a full-time employee in his new principal place of work for only 36 weeks and was not entitled to a deduction for moving expenses because he did not meet the 39-week requirement of the law and regulations. The fact that the union's contract permitted the employer to extend the season for any number of weeks desired did not, in the absence of such actual extension, serve to extend the taxpayer's contract to the off-season period.

Under the terms of the contract, the taxpayer could have qualified for the moving expense deduction if his employer had extended the season for 3 additional weeks. This would be true even though the taxpayer was unable to work during the 3 week extension of the season by reason of illness, natural disater, etc., in view of the provision of section 1.217-1(c)(4)(iii) of the regulations that involuntary temporary absence from work will not preclude a taxpayer from being considered a full-time employee.

Likewise, if he had worked for 3 additional weeks during the off-season period, even though for a different employer in the same general location of his new principal place of work, he would have fulfilled the 39-week requirement of the law and regulations and would have been entitled to a deduction for moving expenses.

Under the circumstances described, however, a union member's employment contract covering a season of a specified number of weeks will not, for the purpose of determining whether he is entitled to a deduction for moving expenses, be considered to cover the off-season period by reason of a clause in the union's contract with the employer under which the employer may extend the season for any number of weeks desired.

Accordingly, since the taxpayer is under contract for a season of less than 39 weeks and he did not secure additional employment, he is not entitled to a deduction for the expense he pays or incurs in moving to the location of his new place of employment.