Frank and Barbara Biehl - Page 18

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          substantiating the deductibility of the expenses is placed on the           
          employee.  Id.                                                              
               The attorney’s fees and costs incurred in a wrongful                   
          termination suit against a former employer do not meet the first            
          requirement for an accountable plan, the “business connection”              
          requirement of section 62(a)(2)(A), as incorporated in section              
          1.62-2(d)(1), Income Tax Regs.  Because we hold that Mr. Biehl’s            
          attorney’s fee does not satisfy the business connection                     
          requirement, we need not reach whether it satisfies the                     
          substantiation and return of excess requirements of paragraphs              
          (e) and (f) of the accountable plan regulations.10                          
               Threshold Requirement for Accountable Plan:  Deductible                
               The threshold requirement for deducting any expense from               
          gross income in computing adjusted gross income under section               
          62(a) is that the expense be allowed as a deduction under some              

               10In Shotgun Delivery, Inc. v. United States, 269 F.3d 969,            
          972 & n.2 (9th Cir. 2001), the Court of Appeals observed:                   
                    The district court concluded that Shotgun had                     
               failed to establish an adequate business connection for                
               its reimbursement payments.  85 F. Supp. 2d at 965.                    
               This conclusion lies at the core of the summary                        
               judgment against Shotgun and is the primary bone of                    
               contention on appeal.2  * * *                                          
                    The district court also held that Shotgun had not                 
               complied with the “return of excess” requirement.  85                  
               F. Supp. 2d at 965-66.  We have no need to review that                 
               determination, as the lack of an adequate “business                    
               connection” is sufficient to invalidate Shotgun’s                      
               reimbursement plan.                                                    

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