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employees but because the employment tax provisions treat
unsubstantiated and excess per diem travel allowances as subject
to employment taxes as if they were compensation). Any
disagreement with that legal interpretation should be addressed
on the merits, and the innuendo in the majority opinion of
factual inconsistency on respondent’s part in the
characterization of per diem allowances is inappropriate.
The more significant concern with regard to “inconsistent”
characterizations in this case should be with United's efforts to
recharacterize entirely the per diem allowances that United, its
employees, and the labor unions, for all other purposes, treated
as employee travel expenses.1 United now, years later, and
solely for Federal income tax purposes, attempts to
inconsistently treat such travel expenses as employee
compensation, outside the scope of the substantiation
requirements of section 274(d), and fully deductible under
section 162(a)(1).
An extensive body of case law limits a taxpayer’s ability to
change the treatment of reported items of income and deductions.
See, e.g., Norwest Corp. & Subs. v. Commissioner, 111 T.C. 105,
146-147 (1998); LeFever v. Commissioner, 103 T.C. 525, 541-545
(1994), affd. 100 F.3d 778 (10th Cir. 1996).
1 The parties’ stipulation of facts filed with the Court in
this case repeatedly acknowledges United’s specific treatment of
the per diem allowances as travel expenses.
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