Tax practitioners are acutely aware that the Tax Cuts and Jobs Act of 2017 (TCJA) significantly altered many long-standing provisions of the Internal Revenue Code (IRC). Among these changes was the suspension of the deduction for moving expenses under IRC Section 217 for taxable years beginning after December 31, 2017, and before January 1, 2026. A narrow exception was carved out for certain members of the U.S. Armed Forces. A recent bench opinion from the Tax Court, Tim Kent & Wendi Kent v. Commissioner of Internal Revenue, Docket No. 14884-23, issued on March 20, 2025, provides a straightforward application of this provision, confirming that this exception does not extend to civilian contractors, even those moving under military orders. This article reviews the pertinent facts, the legal framework analyzed by the Court, and its conclusion, which resulted in a decision for the Commissioner.

Background and Facts

The case involved Tim and Wendi Kent (Petitioners), who timely filed a joint Form 1040, U.S. Individual Income Tax Return, for the 2020 tax year. On this return, they claimed a deduction for moving expenses. The Commissioner of Internal Revenue (Respondent) subsequently issued a Notice of Deficiency on July 28, 2023, disallowing this deduction. The disallowance resulted in a proposed deficiency of $3,951.

The Petitioners contested the Notice by timely petitioning the Tax Court. A trial was held in Tampa, Florida, on March 20, 2025, where both Petitioners and counsel for Respondent appeared and were heard. The material facts of the case were undisputed.

In 2020, the year at issue, Petitioners incurred moving expenses. They contended that these expenses were deductible because they were part of a permanent change of duty station for Ms. Kent’s job with the United States Air Force. Ms. Kent had received official orders, a DD Form 1614, directing her to move. However, critically, neither Ms. Kent nor Mr. Kent was a member of the military in 2020. Instead, Ms. Kent was a civilian contractor for the Air Force.

Taxpayer’s Position and the Issue

Petitioners argued that their move, initiated by military orders for a permanent change of duty station for Ms. Kent’s work with the Air Force, qualified the expenses for deduction. The core issue before the Court was whether the moving expenses incurred by Petitioners in 2020 were deductible for federal income tax purposes, specifically challenging the Commissioner’s disallowance of the deduction claimed on their 2020 return.

Court’s Analysis and Applicable Law

The Court began its analysis by reiterating fundamental principles of tax litigation. The Commissioner’s determination in a notice of deficiency is presumed correct, placing the burden of proof on the taxpayer to demonstrate that the determination is erroneous. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The Petitioners did not claim, and the record did not indicate, that the burden of proof shifted to the Respondent under IRC Section 7491(a).

Furthermore, the Court emphasized that deductions are a matter of legislative grace, and the taxpayer bears the burden of proving entitlement to any claimed deduction. Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). To claim a deduction, a taxpayer must demonstrate its allowability under a specific statutory provision. See § 6001; Hradesky, 65 T.C. at 89–90; Treas. Reg. § 1.6001-1(a).

The statutory basis for the moving expense deduction is IRC Section 217. Prior to TCJA, Section 217(a) generally permitted a deduction for moving expenses paid in connection with starting work at a new place. However, TCJA added Section 217(k), which suspended the effectiveness of Section 217 for the period from 2018 through 2025, a period that includes the 2020 tax year at issue.

Section 217(k) contains an exception, stating that the suspension does not apply "in the case of an individual to whom subsection (g) applies". The Court explained that Section 217(g) specifies the exception applies only to "a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station". This means that, during the suspension period (2018-2025), only members of the Armed Forces of the United States were eligible to deduct moving expenses from their income.

The term "Armed Forces of the United States" is defined in IRC Section 7701(a)(15) to include "all regular and reserve components of the uniformed services," specifically naming "commissioned officers and personnel below the grade of commissioned officers in such forces". The Court noted its prior rulings that civilians, including members of the civil service of any military branch, are not entitled to exclusions reserved solely for the military. See § 112; Eram v. Commissioner, T.C. Memo. 2014-60 fn. 7; Hildebran v. Commissioner, T.C. Memo. 2004-42 (citing Land v. Commissioner, 61 T.C. 675 (1974)).

Application of Law to Facts and Conclusion

Applying the law to the undisputed facts, the Court determined that Petitioners did not meet the criteria for the moving expense deduction exception under IRC Section 217(g). The key fact was that Ms. Kent was a civilian contractor for the Air Force in 2020, not a member of the military. The Court stated directly that civilian contractors are not part of the armed forces such that moving expenses were deductible for them in 2020. Therefore, Petitioners did not fall within the exception provided by Section 217(g).

The Court acknowledged that the move occurred during the pandemic and was at the direction of the Air Force, and appreciated that the result might be disappointing. However, it emphasized its obligation to apply the law as written.

Based on this analysis, the Court concluded that Petitioners were not entitled to the claimed moving expense deduction. A decision will be entered for the Respondent, sustaining the deficiency.

Practice Takeaway

This bench opinion serves as a clear reminder that the moving expense deduction is largely unavailable for tax years 2018 through 2025 due to the TCJA suspension. The narrow exception under IRC Section 217(g) applies strictly to members of the U.S. Armed Forces on active duty moving pursuant to military orders incident to a permanent change of station. Taxpayers who are civilian employees or contractors, even those working for or moving under orders from a military branch, do not qualify for this exception. CPAs should advise clients accordingly when reviewing deduction eligibility for moves occurring during this suspension period.

(Note: This article is based solely on the provided excerpts of the bench opinion in Tax Court Case No 14884-23. Bench opinions represent the Court’s oral findings of fact and opinion and, pursuant to the Court’s statement, may not be relied upon as precedent in any other case.)

Prepared with assistance from NotebookLM.