Marc G. Bissonnette and Lillian I. Cone - Page 23

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               As a general rule, this Court will not consider issues                 
          raised for the first time on brief where surprise and prejudice             
          are found to exist.  Fox Chevrolet, Inc. v. Commissioner, 76 T.C.           
          708, 735 (1981).  Petitioner was not surprised or prejudiced.               
          The revenue procedures petitioner relied upon, as discussed                 
          above, clearly state that section 274(n)(1) reduces the allowable           
          Federal M&IE rate by 50 percent.  Furthermore, petitioner raised            
          in his pretrial memorandum and opening brief the issue that “If             
          the taxpayer was ‘away from home,’ what amount is allowable as a            
          travel deduction?”  Accordingly, this Court finds petitioner was            
          not surprised and prejudiced by respondent’s posttrial                      
          contentions in this regard.                                                 
               Section 274(n)(1)(A) provides that the amount allowable as a           
          deduction for “any expense for food or beverages” is generally              
          limited to 50-percent of the amount of the expense that would               
          otherwise be allowable.  The revenue procedures provide rules for           
          applying the section 274(n)(1) 50-percent limitation to per diem            
          allowances.  Under section 6.05(1) of the revenue procedures, a             
          taxpayer who computes the amount of his or her M&IE under section           
          4.03 of the revenue procedures is required to treat that amount             
          as an expense for food and beverages.  The expenses are thus                
          subjected to section 274(n)(1).                                             
               Petitioner incurred food or beverage and incidental expenses           
          while traveling away from home for business during the years at             
          issue.  Petitioner also computed and substantiated his M&IE under           




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