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advance is received. The facts and circumstances of each
arrangement determine whether an employee is required to return
amounts in excess of substantiated expenses. Id.
Under the arrangement here, petitioner was required to get
Mr. Kerkinni’s permission before making expenditures for IMC. He
was also required to submit his receipts to Mr. Kerkinni for
reimbursement. IMC agreed to pay petitioner whatever amounts it
could afford to pay as reimbursements. There is no evidence that
petitioner was required to return any amounts he received that
exceeded his expenses. Although petitioner was required to
substantiate expenses, the annual reimbursement amounts exceeded
petitioner’s expenses. If the excess amounts were meant to be
advances for anticipated expenses petitioner would make, there is
no evidence that the advances were calculated to approximate the
amounts of the anticipated expenditures. The record does not
show whether petitioner did in fact return any of the excess
amounts to IMC. Based on all the facts available to us, we do
not believe that the arrangement between petitioner and Mr.
Kerkinni required petitioner to return excess amounts to IMC.
Therefore, the arrangement did not satisfy the returning amounts
in excess of expenses requirement of section 1.62-2(f), Income
Tax Regs.
We believe that petitioner and Mr. Kerkinni did come to an
agreement about how IMC would reimburse petitioner for his
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