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DriAll's reimbursement policies for business travel, meals
and entertainment, and general business expenses required an
employee to obtain preapproval for the expenses before incurring
them. Preapproval for business travel and general business
expenses could be obtained from the accounting department and the
head of the department incurring the expense. Meals expenses in
excess of $35 per day and any entertainment expenses also
required preapproval, but only from the accounting department.
Mr. Applegate was the head of his department and the head of
accounting and preapproved his own expenses.
During 1999, Mr. Applegate paid the following expenses with
respect to his employment with DriAll:
Item Amount
Mileage $17,967.84
Travel 6,500.27
Business expenses 5,111.39
Meals & entertainment 1,770.00
$31,349.50
Mr. Applegate gave Ms. Wang the receipts for his expenses, and on
their 1999 Schedule A, Itemized Deductions, petitioners claimed a
total deduction for unreimbursed employee business expenses of
$31,349.50, less the 2-percent AGI floor of $2,132.24, or
$29,217.26. Mr. Applegate could have received reimbursement from
DriAll for these expenses instead of deducting them on their tax
return. Respondent disallowed all of petitioners' claimed
deductions for unreimbursed employee business expenses.
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Last modified: May 25, 2011