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Respondent does not dispute that Beech Trucking’s mileage-based
reimbursement arrangement satisfies the business connection test
under the section 62(a)(2) regulations. Cf. Shotgun Delivery,
Inc. v. United States, 269 F.3d 969 (9th Cir. 2001); Trucks, Inc.
v. United States, 234 F.3d 1340 (11th Cir. 2000). Nor does
respondent dispute that this per diem arrangement satisfies the
substantiation requirements described in section 1.62-2(e),
Income Tax Regs., which permits travel expenses governed by
section 274(d) (as are those at issue here) to be deemed to be
substantiated in accordance with rules prescribed pursuant to the
authority granted by section 1.274(d)-1, Income Tax Regs., or
section 1.274-5T(j), Temporary Income Tax Regs., 50 Fed. Reg.
46032 (Nov. 6, 1985); i.e., in accordance with the Revenue
Procedures. To the contrary, respondent implicitly acknowledges
that the reimbursed travel expenses at issue here are deemed to
be substantiated under the Revenue Procedures. The only issue is
how the travel expenses are to be characterized–-an issue that
the section 62 regulations do not explicitly address other than
by cross-referencing the regulations pursuant to which the
Revenue Procedures were promulgated.
b. Are the Revenue Procedures, as Applied,
Otherwise Invalid?
Petitioner also suggests more generally that respondent
acted arbitrarily or unlawfully by applying in this case the
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