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argument, petitioner cites section 274(e)(3) and the regulations
thereunder.
We construe petitioner’s argument as being predicated upon
section 274(n)(2)(A), which provides that the section 274(n)
limitation does not apply with respect to any expense described
in (among other sections) section 274(e)(3).
Section 274(e)(3) provides that certain reimbursed expenses
are not subject to section 274(a), which generally disallows
deductions for expenses with respect to entertainment activities
and facilities. Specifically, section 274(e)(3) provides that
section 274(a) shall not apply to:
Expenses paid or incurred by the taxpayer, in
connection with the performance by him of services for
another person (whether or not such other person is his
employer), under a reimbursement or other expense
allowance arrangement with such other person, but this
paragraph shall apply–-
(A) where the services are performed for
an employer, only if the employer has not
treated such expenses in the manner provided
in paragraph (2), or
(B) where the services are performed for
a person other than an employer, only if the
taxpayer accounts (to the extent provided by
subsection (d)) to such person.
15(...continued)
wherein it treated 40 percent of the per diem payments as being
subject to the sec. 274(n) limitation. Moreover, petitioner’s
argument is inconsistent with the premise of the prayer for
relief in this litigation, wherein petitioner has not contended
that Beech Trucking is entitled to greater deductions than it
claimed on its tax returns on the basis of its application of the
sec. 274(n) limitation.
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