- 12 -
4.02, 1996-1 C.B. at 688.9 For this purpose, a per diem
allowance is treated as paid only for M&IE in various specified
circumstances, including where the allowance is computed on a
basis similar to that used in computing the employee’s wages or
other compensation (e.g., the number of hours worked, miles
traveled, or pieces produced).10 Rev. Proc. 96-28, sec. 4.02,
1996-1 C.B. at 688.
The Revenue Procedures contain special rules for applying
the section 274(n) 50-percent limitation to per diem allowances.
Specifically, under the Revenue Procedures, if a per diem is paid
only for M&IE, an amount equal to the lesser of the per diem
allowance for each calendar day or the Federal M&IE rate is
9 Under special rules for the transportation industry
(including the trucking industry), a taxpayer is permitted to
treat $32 as the Federal M&IE rate for all localities of travel
in the continental United States. Rev. Proc. 96-28, sec.
4.04(2), 1996-1 C.B. at 688.
10 Sec. 4.02 of the Revenue Procedures provides that a per
diem allowance is treated as paid only for M&IE if:
(1) the payor pays the employee for actual expenses for
lodging,
(2) the payor provides the lodging in kind,
(3) the payor pays the actual expenses for lodging
directly to the provider of the lodging,
(4) the payor does not have a reasonable belief that
lodging expenses were or will be incurred by the
employee, or
(5) the allowance is computed on a basis similar to
that used in computing the employee’s wages or
other compensation (e.g., the number of hours
worked, miles traveled, or pieces produced).
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