Andrew S. and Linda Hayworth Brenner - Page 16

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          requirement “if it requires each business expense to be                     
          substantiated to the payor in accordance with paragraph (e)(2)              
          [relating to expenses governed by section 274(d)] or (e)(3)                 
          [relating to expenses not governed by section 274(d)]”.  In                 
          pertinent part, section 1.62-2(e)(3), Income Tax Regs.                      
          (applicable to this case), provides:                                        
               An arrangement that reimburses business expenses * * *                 
               meets the requirements of this paragraph (e)(3) if                     
               information is submitted to the payor sufficient to                    
               enable the payor to identify the specific nature of                    
               each expense and to conclude that the expense is                       
               attributable to the payor’s business activities.                       
               Therefore, each of the elements of an expenditure * * *                
               must be substantiated to the payor.  It is not                         
               sufficient if an employee merely aggregates expenses                   
               into broad categories (such as “travel”) or reports                    
               individual expenses through the use of vague,                          
               nondescriptive terms (such as “miscellaneous business                  
               expenses”).  See � 1.162-17(b).                                        
               While section 1.62-2(e)(1), Income Tax Regs., appears to set           
          forth a precondition, i.e., that an arrangement specifically                
          require substantiation, section 1.62-2(e)(3), Income Tax Regs.,             
          seems to require action, i.e., that certain information actually            
          be submitted to the payor in accordance with the aforementioned             
          requirement.  We assume that, to satisfy the substantiation                 
          requirement, the arrangement must require that the information              
          called for by subparagraph (3) be submitted and that, for an                
          amount to be paid pursuant to a reimbursement arrangement, such             
          information must actually be submitted in accordance with such              
          requirement.  See sec. 1.162-17(b), Income Tax Regs. (employee              

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