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SWIFT, J., dissenting: This case involves claimed ordinary
deductions in the range of $100 million and extensive arguments
by the parties. If it works (which I don’t believe it does), the
majority opinion is remarkable in its brevity.
Recharacterization of Per Diem Allowances
as Employee Compensation
The majority opinion suggests that respondent’s
characterization herein for corporate income tax purposes of
United’s per diem allowances is inconsistent with respondent’s
characterization of the per diem allowances in the pending
employment tax litigation. See majority op. p. 8. I disagree.
As I understand respondent’s positions, in both the income
tax and the employment tax contexts, respondent is treating the
per diem allowances as travel expenses. Respondent simply takes
the position, as a matter of law, that the income tax and the
employment tax regimes are not necessarily in pari materia and
that under those different tax regimes the day-trip per diem
allowances and the excess of the overnight per diem allowances
(i.e., the portion of the per diem allowances not substantiated)
are nondeductible to United for corporate income tax purposes
(because of United’s failure to satisfy the substantiation
requirements of section 274(d)) and are subject to employment tax
liability (not because the unsubstantiated and excess travel per
diem allowances actually constitute wage compensation to United’s
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