UAL Corporation and Subsidiaries - Page 18




                                       - 18 -                                         
          in his employment in computing adjusted gross income, provides,             
          in pertinent part:                                                          
               the term “adjusted gross income” means * * * gross                     
               income minus the following deductions:                                 
                         *    *    *    *    *    *    *                              
                         (2)  Certain trade and business deductions of                
                    employees.--                                                      
                              (A)  Reimbursed expenses of employees.–-                
                         The deductions allowed by part VI (section                   
                         161 and following) which consist of expenses                 
                         paid or incurred by the taxpayer, in                         
                         connection with the performance by him of                    
                         services as an employee, under a                             
                         reimbursement or other expense allowance                     
                         arrangement with his employer.                               
          However, pursuant to the regulations, if an employee is paid                
          under a reimbursement or expense allowance agreement and makes an           
          “adequate accounting” to the employer, then the employee is not             
          required to report the allowance in income.  Sec. 1.274-5(e)(2),            
          Income Tax Regs; sec. 1.274-5T(f)(2), Temporary Income Tax Regs.,           
          50 Fed. Reg. 46028 (Nov. 6, 1985).  An employee could meet the              
          adequate accounting requirement if the allowance is fully                   
          substantiated by the employee to the employer.  Sec. 1.274-                 
          5(e)(4), Income Tax Regs.; sec. 1.274-5T(f)(4), Temporary Income            
          Tax Regs., 50 Fed. Reg. 46029 (Nov. 6, 1985).   Alternatively,              
          the employee could meet the adequate accounting requirement if              
          the per diem allowance fell under either Rev. Rul. 80-62, 1980-1            
          C.B. 63, or Rev. Rul. 84-164, 1984-2 C.B. 63, because the                   







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