- 14 - expenses. However, because petitioners have not shown that the reimbursement arrangement satisfied all three of the requirements of section 1.62-2, it did not qualify as an accountable plan under section 62(a)(2)(A) and section 1.62-2(c), Income Tax Regs. Therefore, the amounts petitioner received from IMC in the last 9 months of 1996, and in 1997, 1998, and 1999, in excess of the amounts IMC paid for petitioner’s tools as described below, should be included in petitioners’ gross income in those years as compensation. II. Expenses Paid in 1994 and 1995 Petitioners argue that expenditures of $10,393.90 petitioner made in 1994 and 1995 were properly excludable from their gross income in the years covered by the accountable plan, because the amounts were repaid as part of an accountable plan. IMC paid petitioner a salary in 1994 and 1995 but did not reimburse him for expenses during those years.2 Because we have found that the arrangement between petitioner and Mr. Kerkinni did not qualify as an accountable plan in 1996, 1997, 1998, or 1999, petitioner’s expenses in 1994 and 1995 were not part of an accountable plan in any year. 2The record does not show whether petitioners claimed these expenses as miscellaneous itemized deductions from their adjusted gross income in 1994 and 1995.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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