Nicholas M. Romer - Page 6

                                        - 6 -                                         
          return of excess requirement.  Sec. 1.62-2(d)-(f), Income Tax               
          Regs.  If an arrangement meets these three requirements, all                
          amounts paid under the arrangement are, in general, treated as              
          paid under an accountable plan and are excluded from the                    
          employee's gross income.                                                    
               Respondent conceded on brief that petitioner was an employee           
          of Romer during 1993.  Respondent argues, however, that the                 
          arrangement does not satisfy the business connection and the                
          substantiation requirements set out in section 1.62-2(d), Income            
          Tax Regs., and section 1.62-2(e), Income Tax Regs., respectively.           
          Business Connection Requirement                                             
               Section 1.62-2(d)(1), Income Tax Regs., provides that an               
          arrangement satisfies the business connection requirement if it:            
               provides advances, allowances (including per diem                      
               allowances * * *), or reimbursements only for business                 
               expenses that are allowable as deductions by Part VI                   
               (section 161 and the following), subchapter B, chapter                 
               1 of the Code, and that are paid or incurred by the                    
               employee in connection with the performance of services                
               as an employee of the employer.  * * *                                 
               Section 162(a) allows a deduction for the ordinary and                 
          necessary expenses paid or incurred during the taxable year in              
          carrying on a trade or business, including the trade or business            
          of being an employee.  Commissioner v. Flowers, 326 U.S. 465                
          (1946).  Section 162(a)(2) allows a deduction for traveling                 
          expenses if the expenses are:  (1) Ordinary and necessary; (2)              
          paid or incurred while away from home; and (3) paid or incurred             
          in pursuit of a trade or business.  Bochner v. Commissioner, 67             




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011