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imposed by section 274(n)(1)3 applies to the amounts (per diem
amounts) that petitioner’s wholly owned subsidiary Transport
Leasing/Contract, Inc. (TLC), paid during each of the taxable
years at issue to certain truck drivers (truck drivers) in order
to cover the amounts that they spent for food and beverages.4 We
hold that it does.
FINDINGS OF FACT5
Most of the facts have been stipulated and are so found.
Petitioner had its principal office in Arden Hills, Minne-
sota, at the time it filed the petition in this case.
3Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years at
issue. All Rule references are to the Tax Court Rules of Prac-
tice and Procedure. As in effect for taxable years that began
after Dec. 31, 1993, sec. 274(n)(1) limits a deduction for food
or beverages to 50 percent of the amount otherwise allowable (50-
percent limitation). Prior to its amendment by the Omnibus
Budget Reconciliation Act of 1993, Pub. L. 103-66, sec. 13209(a),
107 Stat. 469 (OBRA 1993), sec. 274(n)(1) limited a deduction for
food or beverages to 80 percent of the amount otherwise allowable
(80-percent limitation). In the instant case, the 80-percent
limitation applies to taxable years ended Aug. 31, 1993, and Aug.
31, 1994, and the 50-percent limitation applies to taxable years
ended on or after Aug. 31, 1995.
4The parties agree that, in addition to food and beverage
expenses, the truck drivers in question paid certain incidental
expenses that TLC intended the per diem amounts to cover. The
parties also agree that if the Court were to hold that the
limitation imposed by sec. 274(n)(1) applies, that limitation
applies to the total of all per diem amounts that TLC paid during
each of the taxable years at issue to those truck drivers. For
convenience, we shall refer only to food and beverage expenses.
5Unless otherwise indicated, our Findings of Fact and Opin-
ion pertain to the taxable years at issue.
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