Frank and Barbara Biehl - Page 12

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          by being allowed to deduct all expenses “attributable to a trade            
          or business carried on by” them in computing their adjusted gross           
          income; these expenses are coextensive with all the trade or                
          business expenses they are entitled to deduct under section                 
          162(a).  Employees, on the other hand, are allowed by paragraph             
          (2) to deduct only a very restricted category of their trade or             
          business expenses in computing adjusted gross income.  In                   
          addition, these expenses must be “in connection with” the                   
          employee’s rendering of services to the employer.                           
               Paragraph (2)(A) of section 62(a),6 entitled “Reimbursed               
          expenses of employees”, provides that a taxpayer is allowed a               
          deduction from gross income in arriving at adjusted gross income            
          for “The deductions allowed by part VI (section 161 and                     
          following) which consist of expenses paid or incurred by the                
          taxpayer, in connection with the performance by him of services             
          as an employee, under a reimbursement or other expense allowance            

          of a $151,896 deduction, whereas the taxpayer in Kenseth had his            
          deduction of $91,800 reduced by $5,298 under sec. 67 and phased             
          out to the extent of $4,694 under sec. 68 and was subject to an             
          AMT liability of $17,198 as a result of the disallowance of the             
          miscellaneous itemized deduction for AMT purposes under sec.                
               6Sec. 62(a)(2)(B) and (C) eases the restrictions for two               
          narrow classes of employees.  Performing artists who meet the               
          requirements of sec. 62(b) and employees of a State or a                    
          political subdivision are allowed to deduct all their otherwise             
          allowable trade or business expenses from gross income in                   
          arriving at adjusted gross income.                                          

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