Nicholas M. Romer - Page 5

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          he abandoned the activity in September 1993.  He has not leased             
          or trained any horses since that time.                                      
               The first issue for decision is whether petitioner is                  
          entitled to exclude from his gross income the per diem payments             
          that he received from Romer during 1993.                                    
               Petitioner submitted three invoices to Romer on which he               
          claimed that he worked in Minnesota for four days in mid-January            
          1993 and 2-l/2 days per week for the following 49 weeks for a               
          total of 126-1/2 days for the year.  Romer issued three checks to           
          him during 1993 in the total amount of $10,752.  Petitioner did             
          not report the $10,752 on his 1993 return.  In the statutory                
          notice of deficiency, respondent determined that the payments               
          must be included in gross income.                                           
               Section 61(a) includes in gross income all income from                 
          whatever source derived.  Commissioner v. Glenshaw Glass Co., 348           
          U.S. 426 (1955).  However, section 1.62-2(c)(4), Income Tax                 
          Regs., provides:                                                            
               Amounts treated as paid under an accountable plan are                  
               excluded from the employee's gross income, are not                     
               reported as wages or other compensation on the                         
               employee's Form W-2, and are exempt from the                           
               withholding and payment of employment taxes * * *                      
               [FICA, FUTA, RRTA, RURT, and income tax]. * * *                        
               Section 1.62-2(c)(2)(i), Income Tax Regs., provides that in            
          order for amounts paid under an arrangement to be treated as paid           
          under an accountable plan the arrangement must satisfy a business           
          connection requirement, a substantiation requirement, and a                 





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