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The day trip allowances were compensation in the form of
fringe benefits.9 Section 61(a)(1) provides that gross income
includes “Compensation for services, including fees, commissions,
fringe benefits, and similar items”. (Emphasis added.) As
applicable for the years 1985 through 1988, section 1.61-
2T(a)(3), Temporary Income Tax Regs., 50 Fed. Reg. 52286 (Dec.
23, 1985), provides that “A fringe benefit provided in connection
with the performance of services shall be considered to have been
provided as compensation for services.” (Emphasis added.)
The regulations applicable to the years in issue recognize
that employer-provided meals or meal allowances are taxable
fringe benefits unless specifically excluded from income under
section 132.10 Section 1.132-6T, Temporary Income Tax Regs., 50
Fed. Reg. 52308 (Dec. 23, 1985), recognizes that meals or meal
allowances to employees (for meals not otherwise deductible under
section 162(a)(2)) are generally considered to be taxable income
9The Court of Federal Claims and the Court of Appeals for
the Federal Circuit considered similar per diem allowances within
the framework of fringe benefits. Am. Airlines, Inc. v. United
States, 40 Fed. Cl. at 722; Am. Airlines, Inc. v. United States,
204 F.3d at 1110.
10For the years in issue, sec. 132 excluded the following
fringe benefits from gross income: (1) No-additional-cost
service; (2) qualified employee discount; (3) working condition
fringe; and (4) de minimis fringe.
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