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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 and are not subject to
withholding. 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.]
United’s attempt to recharacterize as deductible
compensation the day-trip per diem travel allowances and the
excess portion (over $14) of the overnight per diem travel
allowances should be rejected.
The Substantiation Requirements of Section 274(d)
I do not understand the casual manner by which the majority
opinion bypasses the substantiation requirements of section
274(d).
It appears to me that the substantiation requirements for
travel expenses under section 274(d) are applicable to day-trip
travel allowances, as well as to overnight travel allowances.
The language of section 1.274-5T(a)(1), Temporary Income Tax
Regs., 50 Fed. Reg. 46027 (Nov. 6, 1985), states that “no
deduction or credit shall be allowed with respect to–-(1)
Traveling away from home * * *”. This regulatory language does
not say that the requirements of section 274(d) do not apply to
day-trip travel expenses. Any such reading would be contrary to
the explicit language of the statute, as pointed out below.
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