- 32 - 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.Page: Previous 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Next
Last modified: May 25, 2011