- 13 -
petitioner has deducted its expenses of operating the aircraft,
that is no more or less than it was entitled to under section 162
and pertinent regulations. Finally, the application of the
benefit provisions requiring the reporting of the value of the
benefit to the employee may result in the employee’s reporting
more imputed income than the employer is entitled to deduct.
With little support for respondent’s position, we find
petitioner’s interpretation of the “to the extent” language of
section 274(e)(2) is more appropriate and more likely the one
intended.
We also note that the section 274(e) regulations also refer
to the section 274(e) subsections as exceptions. See, e.g., sec.
1.274-2(f)(2), Income Tax Regs., listing the nine categories of
expenditures similar to those listed in section 274(e). One of
those categories includes travel and entertainment expenses “to
the extent that” they are treated as compensation. Sec. 1.274-
2(f)(2)(iii), Income Tax Regs. Section 1.274-2(f)(1), Income Tax
Regs., provides that the limitations on deductions for
entertainment expenses are not applicable to the listed
categories. That regulation also provides that the expenditures
in those categories shall be deductible to the extent allowable
under chapter I of the Code. See id. These factors also support
petitioner’s interpretation of the subsection as an exception.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011