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98-64, 1998-2 C.B. 825. The parties stipulated that this full M
& IE rate deduction purportedly was supported by a “Sailor Travel
Statement” attached to petitioners’ return.
After petitioners’ return was filed, Johnson v.
Commissioner, 115 T.C. 210 (2000), was issued.
During the examination of petitioners’ return, petitioners
conceded that they were not entitled to the full M & IE rate
deduction as claimed. Instead, petitioners conceded they were
entitled to the lesser total amount of $1,978, which represents
the “incidental expense” portion of the M & IE rate, as allowed
by Johnson v. Commissioner, supra.
The $9,169 adjustment in the notice of deficiency represents
the subtraction of the “incidental expense” of $1,978 from the
$11,147 expense claimed on petitioners’ return.
Petitioners now seek a deduction for “actual expenses”
incurred while in the course of travel.
As this Court noted in Johnson v. Commissioner, supra at
228, “taxpayers, to the extent that the amounts set forth in the
revenue procedures fail to reflect the actual cost of their
incidental expenditures, are entitled to a deduction for their
actual expenses. In such a situation, however, taxpayers must be
prepared to meet all the substantiation requirements, including,
especially, written documentation as to the amounts of those
costs.” The Court goes on to refer to the section 274
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Last modified: May 25, 2011