- 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.
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