- 28 -
The caselaw involving reimbursement arrangements in
continuing employment relationships is consistent with this
interpretation. In Shotgun Delivery, Inc. v. United States, 269
F.3d 969, 972 (9th Cir. 2001), the Court of Appeals for the Ninth
Circuit characterized reimbursable expenses under an accountable
plan as those that “have a ‘business connection,’ that is, only
permitted expenses that employees actually incur or are
‘reasonably expected to incur’ in connection with their
employment duties” (quoting section 1.62-2(d), Income Tax Regs.).
The quoted language presupposes the existence of an employer-
employee relationship when the expense is incurred and indicates
that the expense must be “in connection with” the performance of
the regular services for which the employee is employed.
The jurisprudence of this Court is in accord with the view
expressed by the Court of Appeals for the Ninth Circuit. In
Rietzke v. Commissioner, 40 T.C. 443, 453 (1963), we held that
“Only amounts received from an employer which are actually
expended for the employer’s business or for business purposes
designated by the employer may be deducted from the gross income
of the employee” under a reimbursement arrangement under section
62. To make this showing, we required the taxpayer to come
forward with proof that he incurred expenses “on behalf” of his
employer. Id.; see also Price v. Commissioner, T.C. Memo. 1971-
323 (describing expenses qualifying for section 62(a)(2)(A) as
Page: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 NextLast modified: May 25, 2011