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for the taxable year ending December 31, 1996; $198,462 for the
taxable year ending March 31, 1997; and $1,048,686 for the
taxable year ending December 31, 1997, claimed by Continental
Express, Inc. (Continental or the corporation), an S corporation
in which petitioners are shareholders. At issue is the amount
that petitioners may deduct with respect to per diem allowances
Continental provided to its drivers, and, particularly, whether
the 50-percent limitation of section 274(n) applies to the total
amount of the per diem payments.
FINDINGS OF FACT
The stipulation of facts, supplemental stipulation of facts,
and attached exhibits are incorporated herein by this reference.
Continental Express, Inc.
Continental is an S corporation within the meaning of
section 1361(a)(1). At the time they filed their petitions, all
petitioners resided in Arkansas, except Edward and Bonnie Harvey,
who resided in Florida, and Deborah Harvey, who resided in
Tennessee. Petitioners’ yearend ownership percentages as of
December 31, 1995, December 31, 1996, and March 31, 1997 were:
Shareholder Ownership Percentage
Ralph E. Bradbury 5.00
Warren D. Garrison 1.25
2(...continued)
the Internal Revenue Code in effect for the years at issue, all
Rule references are to the Tax Court Rules of Practice and
Procedure, and all amounts are rounded to the nearest dollar.
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Last modified: May 25, 2011