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logs, receipts, bills of lading, and such to ATS, which used
these materials to determine expense reimbursements.
Beech Trucking’s 1995 and 1996 Tax Returns
On its Forms 1120S, U.S. Income Tax Return for an S
Corporation, for the years at issue, Beech Trucking deducted (as
part of “Other deductions”) driver-related expenses including
wages, per diem allowances, group insurance, workers’
compensation, tolls/scales, “motels and layovers”, and “hiring
cost–-drivers”. The amounts deducted as per diem payments were
$671,695 and $765,009, for 1995 and 1996, respectively. These
claimed per diem amounts represent 80 percent of the actual per
diem payments made to the drivers.4
Respondent’s Determination
Respondent commenced the examination of Beech Trucking’s
1995 and 1996 Forms 1120 on May 13 and September 30, 1997,
respectively. In the FSAA, issued July 23, 1999, respondent
determined that under section 274(n) Beech Trucking was entitled
to deduct only 50 percent of the total per diem payments.
Respondent determined that Beech Trucking had overstated its
deductions with respect to the per diem payments by $251,885 and
$286,878 for 1995 and 1996, respectively.
4 To arrive at the 80-percent claimed deduction, Beech
Trucking applied the sec. 274(n) 50-percent limitation to 40
percent of the total per diem amounts paid during 1995 and 1996
and deducted the remaining 60 percent in full.
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Last modified: May 25, 2011