Steven J. and Terry L. Namyst - Page 8

                                        - 8 -                                         
          of services as an employee, under a reimbursement or other                  
          expense allowance arrangement with his employer.”  Expense                  
          reimbursements under an accountable plan are not reported as                
          wages on the employee’s Form W-2 and are exempt from withholding            
          and payment of employment taxes.  Sec. 1.62-2(c)(4), Income Tax             
          Regs.  In order to qualify as an accountable plan under section             
          62(a)(2)(A), an arrangement must satisfy the business connection,           
          substantiation, and return of excess requirements.  Sec. 1.62-              
          2(c)(1), Income Tax Regs.  The business connection,                         
          substantiation, and return of excess requirements under section             
          1.62-2(d), (e), and (f), Income Tax Regs., are applied on an                
          employee-by-employee basis; therefore, the failure of one                   
          employee to substantiate his expenses would not cause                       
          reimbursements to other employees to be treated as made under a             
          nonaccountable plan.  Sec. 1.62-2(i), Income Tax Regs.                      
               A.   Business Connection Requirement                                   
               The business connection requirement is satisfied if an                 
          arrangement provides advances, allowances, or reimbursements only           
          for business expenses that are allowed as deductions under                  
          sections 161 through 198, and that are paid by the employee in              
          connection with the performance of services as an employee of the           
          employer.  Sec. 1.62-2(d)(1), Income Tax Regs.; see also Biehl v.           
          Commissioner, 118 T.C. 467, 482 (2002), affd. 351 F.3d 982 (9th             








Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011