Section of Taxation Publications
  VOL. 56
NO. 1
FALL 2002
Contents | TTL Home

 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
The Friendly Skies: Per Diem Allowances to Airline Employees Deemed Compensation in UAL Corporation v. Commissioner
Scott M. Singer


In UAL Corporation and Subsidiaries v. Commissioner, the United States Tax Court held that per diem allowances paid to traveling employees were deductible as personal service compensation under section 162(a)(1) of the Code.

Part I of this Note presents the factual and regulatory framework of UAL. Part II provides the parties’ arguments. Part III explains the majority opinion of the Tax Court and compares it to different rationales presented by other Tax Court members and the Court of Federal Claims. Part IV analyzes the reasons used by the courts to characterize the per diem allowance payments as compensation or travel expenses. Part IV further explains why the Tax Court should have instead held that the payments were fully deductible as substantiated travel expenses. Part V suggests some considerations for future litigants dealing with this question.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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