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(1975), revd. 544 F.2d 686 (3d Cir. 1976), revd. 434 U.S. 77
(1977), where we stated: “Even though we have found that the meal
allowance was not intended as additional compensation, it was
obviously compensatory to a trooper to the extent it paid for
food which he otherwise would have had to pay for from some other
source.”3 We also bear in mind, and find as a fact, that United
paid the per diem allowances to the employees intending to
compensate them for their personal services.
Respondent places undue emphasis on the fact that the union
contracts do not specifically characterize the per diem
allowances as personal service compensation. Such a
characterization by the parties to the contracts is not
dispositive as to the characterization of the per diem allowances
for Federal income tax purposes. See Hosp. Corp. of Am. v.
Commissioner, T.C. Memo. 1996-559. Nor is it dispositive that
United reported the per diem allowances as travel expenses for
both tax and financial accounting purposes. The bona fide
employer/employee relationship that United had with the
employees, coupled with their negotiations as to the specifics of
the employees’ compensation package, specifics which included the
payment of per diem allowances, speaks loudly towards a proper
3 Moreover, as the Supreme Court noted in upholding our
decision in that case, the meal allowance given to Kowalski by
way of the cash payments was of a “presumptively compensatory
nature”. Kowalski v. Commissioner, 434 U.S. 77, 94 (1977).
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