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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
Expense
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 * * *
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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