- 17 - expenditures by employees during day trips would not be deductible by the employees as travel expenses, United States v. Correll, 389 U.S. at 299, section 274(d) has no application.13 2. Overnight Trips The holding that the per diem allowances for overnight trips are deductible as compensation under section 162(a)(1) is consistent with the characterization of the day trip allowances. However, it is necessary to provide additional explanation for why the allowances for overnight trips are not “travel” expenses as to petitioner. Section 61(a)(1) provides that compensation for services, including fringe benefits, is included in gross income. Section 62(a), which allows an employee a deduction for expenses incurred 12(...continued) 1985) (same). 13Note also that the regulations under sec. 274 regarding substantiation refer only to travel away from home. Sec. 1.274- 5(a)(1) and (b)(2), Income Tax Regs.; sec. 1.274-5T(a)(1) and (b)(2), Temporary Income Tax Regs., 50 Fed. Reg. 46014 (Nov. 6, 1985). Thus, this Court declined to apply sec. 274(d) to a taxpayer’s business use of his automobile which was purely local. Cobb v. Commissioner, 77 T.C. 1096, 1101 (1981), affd. without published opinion 680 F.2d 1388 (5th Cir. 1982); Gestrich v. Commissioner, 74 T.C. 525, 530-531 (1980), affd. without published opinion 681 F.2d 805 (3d Cir. 1982). Sec. 274(d) was subsequently amended for taxable years after Dec. 31, 1985, to provide that no deduction shall be allowed for listed property, which includes any passenger automobile, unless strict substantiation requirements are met.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
Last modified: May 25, 2011