Beech Trucking Company, Inc., Arthur Beech, Tax Matters Person - Page 1


                                   118 T.C. No. 27                                    

                               UNITED STATES TAX COURT                                

                                    Petitioner v.                                     
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 16452-99.             Filed May 23, 2002.                   

                    P, a trucking company, leases its drivers from an                 
               affiliated company.  P compensates the drivers at a                    
               rate of 24 to 26 cents per mile dispatched, of which                   
               amount 6.5 cents is designated as a per diem allowance.                
               R does not dispute that P’s per diem payments are                      
               ordinary and necessary business travel expenses that                   
               are deemed substantiated pursuant to Rev. Proc. 94-77,                 
               1994-2 C.B. 825, and Rev. Proc. 96-28, 1996-1 C.B. 686.                
                    Held:  On the facts involved herein, P is the                     
               common law employer of the drivers and therefore is                    
               subject to the 50-percent limitation of sec. 274(n),                   
               I.R.C., to the extent the per diem payments are for the                
               drivers’ meal expenses.  Held, further, pursuant to                    
               Rev. Proc. 94-77, supra, and Rev. Proc. 96-28, supra,                  
               the per diem payments are treated as being for the                     
               drivers’ meal expenses and thus are subject to the sec.                
               274(n), I.R.C. limitation.                                             

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