- 13 -
treated as an expense for food and beverages (and thus subject to
the section 274(n) 50-percent limitation). Rev. Proc. 96-28,
sec. 6.05, 1996-1 C.B. at 691. If the per diem allowance is paid
for lodging as well as M&IE, the payor must treat an amount equal
to the Federal M&IE rate as an expense for food and beverages.
For this purpose, when a per diem for lodging and M&IE is paid at
a rate that is less that the Federal per diem rate, the payor may
treat an amount equal to 40 percent of the per diem allowance as
the Federal M&IE rate. Id.
C. Application of the Revenue Procedures
On its tax returns for the years at issue, Beech Trucking
claimed deductions for the per diem payments on the basis of the
last-described rule of the Revenue Procedures; i.e., it treated
40 percent of the per diem payments as being for food and
beverages and thus subject to the section 274(n) 50-percent
limitation and deducted the remaining 60 percent in full
(resulting in a claimed deduction of 80 percent of the total per
diem payments). See supra note 4.
Respondent does not dispute that the Revenue Procedures
apply to this case; that the per diem payments at issue here
constitute “per diem allowances” within the meaning of the
Revenue Procedures; that the per diem payments are ordinary and
necessary business expenses of Beech Trucking, within the meaning
of section 162; that these expenses are deemed to be
substantiated under the Revenue Procedures; or that they are
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011