- 40 -40 treated such expenses in the manner provided in paragraph (2) [of section 274(e)], or (B) where the services are performed for a person other than an employer, only if the taxpayer accounts (to the extent provided by subsection (d) [of section 274]) to such person. The regulations elaborating on the section 274(e)(3) excep- tions provide in pertinent part: In the case of any expenditure * * * paid or incurred by one person in connection with the performance by him of services for another person (whether or not such other person is an employer) under a reimbursement or other expense allowance arrangement, the limitations on allowability of deductions provided for in * * * this section shall be applied only once, either (1) to the person who makes the expenditure or (2) to the person who actually bears the expense, but not to both. * * * Sec. 1.274-2(f)(2)(iv)(a), Income Tax Regs. It is petitioner’s position that Beech Trucking Co. v. Commissioner, 118 T.C. 428 (2002), requires the Court to hold in the instant case that In the case of a three-party arrangement in which a professional employer organization leases truck drivers to trucking companies, * * * the party which is subject to the Section 274(n) limitation * * * is the common-law employer of the truck drivers. According to petitioner, under Beech Trucking Co. v. Commis- sioner, supra, TLC was not the employer34 of any driver-employee and thus is not subject to the section 274(n)(1) limitation on 34We accord the term “employer” the same meaning as the term “common-law employer”. For convenience, we shall use only the term “employer”.Page: Previous 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 Next
Last modified: May 25, 2011