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In particular, the method in section 6.04(2) of the revenue
procedures allows the taxpayer to prorate the Federal M&IE rate
using any method that is consistently applied and is in
accordance with reasonable business practice. In the example,
even though both days are partial days, a taxpayer is allowed to
use 2 full days of the Federal M&IE rate for travel away from
home for 15 hours the first day (9 a.m. to midnight), and 17
hours the second day (midnight until 5 p.m.).
Petitioner consistently applied the full Federal M&IE rate
to all off-peak-season voyages requiring him to be away from home
for 15 to 17 hours a day. Considering the length of petitioner’s
workday, allowing petitioner to use the full Federal M&IE rate
may be treated as in accordance with reasonable business practice
by analogy to the example.
Therefore, the Court finds petitioners may treat as
substantiated the full Federal M&IE rate pursuant to section 6.04
of the revenue procedures for the days petitioner incurred
expenses while away from home during the off-peak-season voyages
to Victoria with 6- to 7-hour layovers.
E. Section 274(n)(1) 50-Percent Limitation
Petitioner argues that respondent is precluded from
asserting he must reduce the allowable M&IE deduction by 50
percent as required by section 274(n)(1) because respondent
raised it for the first time in his opening brief.
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