UAL Corporation and Subsidiaries - Page 15




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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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