- 41 -
It appears to me that the above language constitutes a
blanket disqualification of the $44 Ruling where there are no
lodging expenses relating to overnight travel to be paid out of
per diem travel allowances. As I read the language of the $14
Ruling, in the context of overnight travel, the maximum allowable
amount that may be deducted under any provision of section 162
without substantiation can be no more than $14 per day in two
instances: (1) Where only employee meals are covered by the
allowances, or (2) where there are no lodging expenses. Our
memorandum opinion to the contrary in Murphy v. Commissioner, T.C.
Memo. 1993-292, does not constitute binding precedent and should
not be followed.4
In the present case, because there were no lodging expenses
to be paid by United’s employees out of the overnight per diem
travel allowances the employees received, section 274(d)(1)
limits the maximum amount deemed substantiated under United’s per
diem program to $14 per day.
Union Negotiations
United and the labor unions specifically bargained for and
characterized the per diem allowances in the union contracts as
travel expenses. United did not pay employment taxes on the per
4 In Rev. Proc. 89-67, sec. 2, 1989-2 C.B. 795, 797, it was
made even clearer that without lodging expenses per diem
allowances would be subject to the $14 limitation.
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