Transport Labor Contract/leasing, Inc. & Subsidiaries v. Commissioner of Internal Revenue

LOKEN, Chief Judge.

The Internal Revenue Code allows an employer to deduct the cost of employee travel expenses (unless treated as income to the employee), provided the employer maintains records properly substantiating the expenses. See 26 U.S.C. §§ 162(a)(2), 274(d). However, the deduction is limited to fifty percent of “any expense for food or beverages.” 26 U.S.C. § 274(n)(l)(A).

Eligible trucking companies may pay their drivers a fixed per diem for driving expenses that is deductible, subject to the § 274(n) limitation. In recent years, many small and medium-sized trucking companies have…