- 22 -
deems $14 substantiated for purposes of meals, while a much
greater amount of the per diem allowance in the instant case was
based on meals and only a small fraction of the overall allowance
was attributable to incidental expenses.
On the basis of these facts, how could United’s payment of
$36, or $37.20, be reasonable when Rev. Rul. 84-164, supra,
treats meals as substantiated only to the extent of $14 and
petitioner’s own expert report attributed, at most, between $4
and $7 to incidental expenses? Allowing petitioner to deduct the
full allowance under the authority of Rev. Rul. 80-62, supra, in
these circumstances conflicts with the overall function of the
deemed substantiation methods. In Am. Airlines, Inc. v. United
States, 204 F.3d at 1111, the Court of Appeals for the Federal
Circuit commented on this conflict:
American argues that even if it cannot meet the
substantiation requirements of � 274(d), American’s
covered meals and incidental expenses allowance of $36
per day fall in the middle range of the $14 meals-only
safe harbor of Rev. Rul. 84-164 and the $44 full per
diem safe harbor of Rev. Rul. 80-62 1980-1 C.B. 63,
and, therefore, American’s $36 per diem allowance
should be deemed substantiated for � 274 purposes. We
agree with the Government that American’s reasoning is
flawed because it ignores the fact that the deemed
substantiated limit under Rev. Rul. 80-62 includes
lodging, which accounts for a greater portion of an
employee’s daily expenses. Further, under American’s
logic, $22 of this amount would include incidental
expenses, and the burden is upon American to prove that
such an amount would meet the “ordinary and necessary”
requirement of I.R.C. � 162.
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