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payments.14 For the reasons described below, we disagree with
each of these arguments.
1. Employment Status of the Beech Trucking Drivers
Petitioner argues that the Beech Trucking drivers were
employed by ATS and not by Beech Trucking. Consequently,
petitioner argues, the section 274(n) limitation should apply
only to ATS and not to Beech Trucking.15 In support of this
14 Petitioner (who has consistently maintained throughout
these proceedings that the truck drivers were not Beech
Trucking’s employees) has not raised and we do not reach any
issue as to whether the per diem payments should be deductible
under sec. 162(a)(1) as personal service compensation paid by
Beech Trucking to the drivers. In UAL Corp. v. Commissioner, 117
T.C. 7 (2001), the taxpayer, pursuant to a collective bargaining
agreement with its employees, paid its pilots and flight
attendants per diem allowances at a specified rate for each hour
the employees were on duty or on flight assignment. This Court
held that the taxpayer was entitled to deduct the per diem
allowances as personal service compensation under sec. 162(a)(1),
finding that the taxpayer would not have paid the per diem
allowances to its employees but for the existence of a bona fide
employer/employee relationship and the need to pay the allowances
in order to secure the employees’ services. Id. at 10. Noting,
among other things, the taxpayer’s negotiation of the per diem
allowances as part of its employees’ compensation package, this
Court found as a fact that in making the per diem payments, the
taxpayer intended to compensate the employees for their personal
services. Id. at 11.
In the instant case, the record does not establish Beech
Trucking’s intent in making the per diem payments or the manner
in which the per diem allowances were determined or by whom.
Moreover, unlike the per diem allowances at issue in UAL Corp. v.
Commissioner, supra, the per diem allowances at issue here were
computed by reference to miles dispatched rather than according
to hours on duty or on travel assignment.
15 Petitioner’s argument is inconsistent with Beech
Trucking’s treatment of the per diem payments on its tax returns,
(continued...)
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