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complained-of conditions contained in sections 4.02 and 6.05 of
the Revenue Procedures.
As previously discussed, the application of section 4.02 of
the Revenue Procedures has two essential consequences with regard
to a mileage-based reimbursement arrangement like the one at
issue here: (1) It imposes an upper limit on the amount of
reimbursed travel expenses that are deemed to be substantiated
(an amount that a qualifying transportation-industry taxpayer may
treat under section 4.04(2) of the Revenue Procedures as being
equal to the $32 specified Federal M&IE rate); and (2) it
characterizes those reimbursed expenses as being M&IE and not
lodging expenses.
Petitioner does not take issue with the reasonableness of
the upper limit imposed by section 4.02 of the Revenue
Procedures. To the contrary, according to petitioner’s
representations on brief, the amount of the upper limit so
imposed (as referenced by the specified Federal M&IE rate of $32)
corresponds closely to the maximum per diem payment ($32.50) that
petitioner alleges would obtain under Beech Trucking’s mileage-
based reimbursement formula.23 Furthermore, the evidence in the
23 Petitioner testified that Federal law prohibits drivers
from driving more than 10 hours a day, and that in setting the
amount of the per diem allowance, Beech Trucking relied on a rule
of thumb that its drivers would drive an average of 45 to 50
miles per hour. Apparently on the basis of this testimony,
petitioner states on reply brief that Beech Trucking’s per diem
arrangement provided a “maximum per diem base of 500 miles at 6.5
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