Smith v. Commissioner

American Cory Smith (plaintiff) was hired by private defense contractor Raytheon Company to work as an engineer at the Pine Gap joint-defense facility in Australia. Raytheon provided Smith with free housing in Alice Springs, approximately 11 miles from his workplace. The housing was on a cul-de-sac occupied by other Pine Gap employees. Smith’s utilities, maintenance, and trash removal were all provided to Smith at no cost. Smith performed some work from home, using a Raytheon-provided fob to remotely access Raytheon’s secure network. For example, Smith completed training programs, managed time sheets, and filled in employee evaluations from his home. For the 2016, 2017, and 2018 tax years, the value of the housing provided to Smith was $15,889, $15,501, and $10,015, respectively. However, Smith did not include those values in his gross income on his federal tax returns. He believed the value of the housing could be excluded from his gross income under Internal Revenue Code § 119. The commissioner of internal revenue (commissioner) (defendant) disagreed, finding that Smith’s housing did not meet the requirements for exclusion under § 119. The commissioner therefore notified Smith that he had tax deficiencies for the relevant tax years and owed the government money. Smith filed suit in the United States Tax Court, challenging the commissioner’s determination. Both parties moved for summary judgment.