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Itemized Deductions, and Schedule E, Supplemental Income and
Loss. Petitioners claimed duplicate deductions for real estate
taxes on Schedule A and Schedule E of their 1990 and 1991
returns. On Schedule A of their 1991 and 1992 returns,
petitioners deducted interest paid on their travel trailer as
home mortgage interest. On Schedule E of their 1991 and 1992
returns, petitioners deducted the total interest paid on 414 and
414-1/2 Monroe as a rental expense.
In January 1992, Tomasek sent to petitioners a letter
regarding the Internal Revenue Service’s increased attention to
per diem amounts. Mr. Baugh contacted Tomasek to inquire again
about petitioners’ per diem amounts.
OPINION
Gross income includes all income from whatever source
derived. Sec. 61. Per diem payments, however, may be excluded
from income if the requirements of section 1.162-17(b)(1), Income
Tax Regs., are met.
The employee need not report on his tax return (either
itemized or in total amount) expenses for travel,
transportation, entertainment, and similar purposes
paid or incurred by him solely for the benefit of his
employer for which he is required to account and does
account to his employer * * * [Emphasis added.]
See also sec. 1.62-2, Income Tax Regs. At trial, Mr. Baugh
admitted that petitioners did not have to account and did not
account to their employers for expenses they incurred in order to
receive the per diem/travel amounts. Petitioners, therefore, do
not meet the requirements of section 1.162-17(b)(1), Income Tax
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