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LARO, Judge: Respondent determined deficiencies of
$1,478,718, $61,867,523, $1,751,161, and $45,981,293 in
petitioner’s 1983, 1984, 1986, and 1987 Federal income taxes,
respectively.1 Following concessions, we must decide whether
petitioner may deduct the per diem allowances paid to its flight
attendants and pilots (collectively, employees) for day trips and
overnight trips (as defined below). We hold it may deduct the
per diem allowances as personal service compensation under
section 162(a)(1).2
FINDINGS OF FACT
Most facts were stipulated. The parties’ stipulation of
facts and the exhibits submitted therewith are incorporated
herein by this reference. The stipulated facts are found
accordingly. Petitioner is a consolidated group of corporations
that files a consolidated Federal income tax return on the basis
of the calendar year. Its principal office was in Elk Grove
Township, Illinois, when its petition was filed. United Air
Lines, Inc. (United), is an airline that provides passenger and
1 Respondent has determined no deficiency for 1985 because
the limitations period was closed when the underlying notice of
deficiency was issued. We discuss 1985 because petitioner’s
deduction of the per diem allowances for that year affects
petitioner’s tax liability for the subject years.
2 Section references are to the Internal Revenue Code in
effect for the subject years. Rule references are to the Tax
Court Rules of Practice and Procedure.
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