UAL Corporation and Subsidiaries - Page 7




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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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