- 25 -
In the instant case, the periods of limitation with respect to
petitioner’s income tax liability for 1986 and 198719 and
employment tax liability for 1985, 1986, and 1987, are still
open. Respondent’s concern is that, since the tax years for the
individual employees are probably closed, the tax due on the
employees’ income will not be paid. However, a remedy for that
situation is to seek withholding tax from petitioner for the
years in issue, a remedy which respondent is currently seeking in
the Court of Federal Claims. United Air Lines, Inc. v. United
States, No. 97-173T (Fed. Cl., filed Mar. 18, 1997). Petitioner
is simply correcting its tax return to account for its initial
erroneous treatment of the per diem allowances as “travel”
expenses.20
18(...continued)
representation or report for that year, and (3) the
taxpayer attempts to change that representation or
report in a subsequent year, after the period of
limitations has expired with respect to the year of the
representation or report, and the change is detrimental
to the Commissioner. * * * [Citations omitted.]
19The only issues in dispute in this case are the
deductibility of the per diem allowances paid for 1985, 1986, and
1987, and the computational items resulting therefrom. No
deficiency was determined for the taxable year 1985 because the
period of limitations for that year had expired at the time the
notice of deficiency was issued. However, the deductibility of
expenses (including per diem allowances) for 1985 directly
affects other tax items, such as net operating loss carrybacks
and carryovers, for the remaining years in issue.
20Indeed, it appears that petitioner’s claim that the
(continued...)
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011