- 26 -
3. Conclusion
The per diem allowances are not deductible by petitioner as
travel expenses. However, these allowances were required under
the terms of the employment contract that petitioner negotiated
with the union. Petitioner had to pay the allowances in order to
receive the services of its employees. The amount of the per
diem allowance paid to each individual employee was determined
based on the number of hours he or she worked while on duty or on
flight assignment and was directly tied to the quantity of
services rendered. The per diem payments were paid for services
actually rendered by the employees and are deductible under
section 162(a)(1).21
WELLS, CHABOT, GERBER, GALE, and MARVEL, JJ., agree with
this concurring opinion.
20(...continued)
allowances are deductible as compensation was predicated on
respondent’s determination that the allowances were “wages” for
employment tax purposes.
21For purposes of this case, respondent has conceded that if
the per diem allowances are deductible as compensation, then the
percentage limitations of sec. 274(n) will not apply.
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