- 14 -
Other portions of section 274 have obvious caps or
limitations on the amount of deduction available to taxpayers.
For example, section 274(b)(1) limits deductions for gifts “to
the extent that such expense * * * exceeds $25.” Therefore,
section 274(e)(2) could have been phrased “expenses are
deductible to the extent that they do not exceed the amount of
expenses treated as compensation” or “to the extent of the amount
includible in an employee’s income”. Congress, however, did not
use language that limits the amount deductible to the amounts
includable.
There exist numerous other examples in the Internal Revenue
Code where Congress intended to place limitations on particular
items. Some are obvious and some more subtle. By means of
slight yet significant modification to section 274(e)(2), a
limitation, as opposed to an exception, could have been
articulated. By changing “to the extent that” to “to the extent
of”, a limitation could have more unambiguously been placed. See
secs. 119(d)(2), 125(d)(2)(B), 136(b), 165(d), 165(h)(2)(A),
170(d)(1)(A), 277(a), and 306(d)(2).
Section 83 is another example of a section expressly
limiting the amount of an employer’s deduction. Addressing the
deduction available for property transferred for the performance
of services, Congress restricted the amount of the deduction to
“an amount equal to the amount included * * * in the gross income
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011