- 35 -
majority op. p. 7, except perhaps its ultimate conclusion under
which millions of dollars of United’s travel expenses become
fully deductible in spite of United’s failure to satisfy the
substantiation requirements of section 274(d), discussed below.
In Am. Airlines, Inc. v. United States, 204 F.3d 1103, 1108
(Fed. Cir. 2000), in connection with the ongoing employment tax
dispute, the U.S. Court of Appeals for the Federal Circuit
appears to have held that the travel expenses in issue (if, on
remand, they are found to have been reasonably expected to be
incurred by the airline employees) could not be recharacterized
as wage compensation for employment tax withholding purposes. In
this regard, the Court of Appeals for the Federal Circuit relied
on and quoted both section 31.3121(a)-1(h) (regarding employment
tax withholding) and section 31.3401(a)-1(b)(2) (regarding income
tax withholding), Employment Tax Regs., which provide as follows:
� 31.3121(a)-1(h): Amounts paid specifically–- either
as advances or reimbursements–-for traveling or other bona
fide ordinary and necessary expenses incurred or reasonably
expected to be incurred in the business of the employer are
not wages. Traveling and other reimbursed expenses must be
identified either by making a separate payment or by
specifically indicating the separate amounts where both
wages and expense allowances are combined in a single
payment. [Emphasis added.]
� 31.3401(a)-1(b)(2): Traveling and other
expenses. Amounts paid specifically–-either as
2(...continued)
F.2d 876 (5th Cir. 1974); Prince v. Commissioner, T.C. Memo.
1997-324.
Page: Previous 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 NextLast modified: May 25, 2011