B-223374, FEB 17, 1987

B-223374: Feb 17, 1987

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CLAIM IS DENIED. ONLY TAXES OR EXPENSES NECESSARY FOR THE COMPLETION OF THE REAL ESTATE TRANSACTION ITSELF ARE REIMBURSABLE. THIS ITEM IS NOT REIMBURSABLE UNDER 5 U.S.C. NOTTE - RELOCATION EXPENSES - STATE INCOME TAX: THIS DECISION IS IN RESPONSE TO A REQUEST FROM MR. THE CLAIM IS DENIED. NOTTE WAS TRANSFERRED FROM PITTSBURGH. NOTTE WAS REQUIRED TO PAY INCOME TAXES OF $1. THE AGENCY NOTES THAT THERE IS NO SPECIFIC PROVISION AUTHORIZING PAYMENT OF THIS ITEM BUT ASKS IF IT MAY BE AUTHORIZED AS A MISCELLANEOUS EXPENSE UNDER 5 U.S.C. THE AGENCY NOTES IT IS CUSTOMARY IN PENNSYLVANIA AND IS ATTRIBUTABLE TO THE SALE OF A RESIDENCE DUE TO A CHANGE IN OFFICIAL STATION. REIMBURSEMENT IS NOT AUTHORIZED.

B-223374, FEB 17, 1987

CIVILIAN PERSONNEL - RELOCATION - RESIDENCE TRANSACTION EXPENSES - TAXES - REIMBURSEMENT - ELIGIBILITY DIGEST: EMPLOYEE WHO SOLD HIS RESIDENCE WHEN TRANSFERRED TO A NEW DUTY STATION REQUESTS REIMBURSEMENT FOR STATE INCOME TAXES INCURRED ON THE PROFIT REALIZED IN THE SALE OF HIS RESIDENCE AT HIS OLD DUTY STATION. CLAIM IS DENIED. UNDER 5 U.S.C. SEC. 5724A (1982), ONLY TAXES OR EXPENSES NECESSARY FOR THE COMPLETION OF THE REAL ESTATE TRANSACTION ITSELF ARE REIMBURSABLE, AND THIS ITEM IS NOT REIMBURSABLE UNDER 5 U.S.C. SEC. 5724B (SUPP. III 1985), OR ANY OTHER AUTHORITY.

MR. GUERRY G. NOTTE - RELOCATION EXPENSES - STATE INCOME TAX:

THIS DECISION IS IN RESPONSE TO A REQUEST FROM MR. JOHN E. TOTTEN, CHIEF, N.O., FINANCIAL OPERATIONS BRANCH, INTERNAL REVENUE SERVICE (IRS), WASHINGTON, D.C., FOR A DECISION CONCERNING THE CLAIM OF IRS EMPLOYEE MR. GUERRY G. NOTTE, FOR REIMBURSEMENT OF STATE INCOME TAXES INCURRED AS A RESULT OF THE SALE OF HIS RESIDENCE. THE CLAIM IS DENIED.

MR. NOTTE WAS TRANSFERRED FROM PITTSBURGH, PENNSYLVANIA, TO WASHINGTON, D.C., AND REPORTED FOR DUTY AT HIS NEW STATION ON JULY 30, 1984. HE SOLD HIS PENNSYLVANIA RESIDENCE ON JANUARY 3, 1985, AND REALIZED A SIGNIFICANT GAIN. THE RECORD INDICATES THAT UNDER PENNSYLVANIA LAW, STATE INCOME TAXES MUST BE PAID ON ALL GAINS FROM THE SALE OF REAL ESTATE. ACCORDINGLY, MR. NOTTE WAS REQUIRED TO PAY INCOME TAXES OF $1,076.30 TO PENNSYLVANIA BECAUSE OF THE PROFIT HE REALIZED ON THE SALE OF HIS OLD RESIDENCE.

THE AGENCY NOTES THAT THERE IS NO SPECIFIC PROVISION AUTHORIZING PAYMENT OF THIS ITEM BUT ASKS IF IT MAY BE AUTHORIZED AS A MISCELLANEOUS EXPENSE UNDER 5 U.S.C. SEC. 5724A (1982). THE AGENCY NOTES IT IS CUSTOMARY IN PENNSYLVANIA AND IS ATTRIBUTABLE TO THE SALE OF A RESIDENCE DUE TO A CHANGE IN OFFICIAL STATION.

REIMBURSEMENT IS NOT AUTHORIZED. TO BE REIMBURSABLE AS A REAL ESTATE EXPENSE AUTHORIZED BY 5 U.S.C. SEC. 5724A, A TAX MUST BE NECESSARY TO THE COMPLETION OF THE REAL ESTATE TRANSACTION ITSELF. JUNE M. LOWRY, B-194860, OCTOBER 15, 1979; AND JUAN M. OLIVAS, B-202392, MAY 11, 1981. THUS, TRANSFER TAXES, BROKERAGE FEES OR OTHER REALTY TRANSACTION COSTS WHICH RESULT DIRECTLY FROM THE TRANSACTION AND ARE NECESSARY TO ITS COMPLETION MAY BE REIMBURSED. HOWEVER, INCOME TAXES INCURRED BECAUSE OF THE PROFIT MADE ON THE SALE OF A RESIDENCE ARE NOT A PART OF OR NECESSARY TO THE REAL ESTATE TRANSACTION ITSELF.

MOREOVER, THE AMOUNT OF THE PROFIT, AND THEREFORE THE AMOUNT OF THE INCOME TAX PAID, WAS BASED UPON A NUMBER OF FACTORS WHICH WERE UNRELATED TO THE ACTUAL SALE. THAT IS, THE NET GAIN WAS AFFECTED BY THE PRICE PAID FOR THE RESIDENCE WHEN MR. NOTTE FIRST PURCHASED IT IN 1976, AND THE IMPROVEMENTS MADE THEREON, THE LOCAL REAL ESTATE MARKET, ETC. CONSEQUENTLY, THE AMOUNT OF THE TAX PAID WAS BASED IN LARGE PART UPON THE FINANCIAL DECISIONS AND PREFERENCES OF MR. NOTTE AND WAS NOT DETERMINED SOLELY BY THE ACTUAL SALE TRANSACTION. THEREFORE, IT IS NOT REIMBURSABLE AS A MISCELLANEOUS EXPENSE UNDER SECTION 5724A. ROBERT A. MCCREA, B-197567, APRIL 15, 1980.

WE ALSO NOTE THAT REIMBURSEMENT IS NOT AUTHORIZED UNDER 5 U.S.C. SEC. 5724B (SUPP. III 1985). THAT SECTION AUTHORIZES AGENCIES TO REIMBURSE EMPLOYEES FOR INCOME TAXES INCURRED AS A RESULT OF PAYMENT FOR CERTAIN OTHER EXPENSES WHICH ARE REIMBURSABLE. IT DOES NOT PROVIDE INDEPENDENT AUTHORITY TO REIMBURSE EMPLOYEES FOR INCOME TAXES INCURRED AS A RESULT OF GAINS OR LOSSES ON A REAL ESTATE TRANSACTION. WE ARE AWARE OF NO OTHER BASIS WHICH WOULD PROVIDE AUTHORIZATION FOR REIMBURSEMENT OF THIS ITEM.

ACCORDINGLY, THE CLAIM IS DENIED.