William K. Starr - Page 5




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               pay for such expenses.  This revenue procedure also                    
               provides an optional method for employees and self-                    
               employed individuals to use in computing the deductible                
               costs of business meal and incidental expenses paid or                 
               incurred while traveling away from home.  * * *                        
               [Emphasis added.]                                                      
               Under Rev. Proc. 94-77, 1994-2 C.B. 825, employees and self-           
          employed individuals are allowed to use the Federal per diem rate           
          to substantiate business meals and incidental expenses incurred             
          when traveling away from home.  However, the use of the Federal             
          per diem rate to substantiate the amount of lodging expenses is             
          available only to certain employer-employee reimbursement                   
          arrangements.  The procedure excludes self-employed individuals             
          from using the Federal per diem rate to substantiate the amount             
          of their lodging expenses.  Therefore, a self-employed individual           
          must still prove the amount of lodging costs with documentary               
          evidence.  See sec. 1.274-5T(c)(2)(iii), Temporary Income Tax               
          Regs., 50 Fed. Reg. 46006 (Nov. 6, 1985).                                   
               This Court has previously addressed the issue of whether a             
          self-employed individual is entitled to use the Federal per diem            
          rate to substantiate the amount of deductible lodging expenses              
          for travel away from home under section 274(d).  In Duncan v.               
          Commissioner, T.C. Memo. 2000-269, the taxpayer, a self-employed            
          individual, claimed deductions for lodging and meals based on the           
          Federal per diem rate.  The Commissioner disallowed the lodging             
          expenses that were claimed for lack of substantiation under                 
          section 274(d).  The Court explained that a self-employed                   





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