Masonry Magazine December 1963 Page. 14
Questions and Answers
FOR THE BUSINESSMAN
Travel, Entertainment, and Gift Expenses
The purpose of this Revenue Ruling is to answer a series of questions relating to the provisions of the income tax regulations promulgated under section 274 (except for subsection (d) thereof) of the Internal Revenue Code of 1954, added by the Revenue Act of 1962. Each question is designed to present, in relatively simple terms, a point of law of general interest to taxpayers, and individual questions should be read in the context of other questions and answers which follow or precede.
This month's MASONRY completes the Question & Answer series relating to provisions of the income tax regulations.
Substantial Control
71. Question: Would an ordinary employee traveling for his employer be affected by the new rules?
Answer: No. An employee who is reimbursed by his employer for his travel expenses is considered not to have substantial control over arranging his business trip provided he is not a managing executive of, or is not closely related to, his employer. Even a managing executive, or an individual who is closely related to his employer, is not affected if he can establish that he did not have substantial control over arranging the particular trip.
72. Question: What type of employee is considered a managing executive for purposes of the travel allocation rule?
Answer: A managing executive would be an employee, who, by reason of his authority and responsibility, is authorized, without effective veto procedures, to decide upon the necessity for his business trip.
73. Question: Is control over the timing of a business trip considered substantial control?
Answer: No. An individual who is required to travel to a business destination will not be considered to have substantial control over arranging the business trip merely because he has control over the timing of the trip.
74. Question: What would be considered substantial control?
Answer: If a professional person decided to attend a convention of a professional association, and he was not sent there by an employer who reimbursed him for the travel, he generally would be considered to have substantial control over arranging the trip.
Vacation Purpose
75. Question: Under the new rules will a person who has substantial control over arranging a combined business-vacation trip in excess of a week always have a portion of his travel expense disallowed if 25 percent or more of the time is devoted to nonbusiness activity?
Answer: No, only if obtaining a personal vacation or holiday was a major consideration in determining to make the trip.
76. Question: If a major consideration in determining to make a business trip is to visit a hospitalized relative, do the new rules apply?
Answer: No. Visiting a relative who is ill would not generally be considered a vacation or holiday. However, if the primary purpose of the trip is to visit an ill relative, for personal reasons, no deduction for travel expenses is allowable as under prior law.
Reimbursed Expenses
77. Question: If the new travel allocation rules apply to an employee who is reimbursed for his expenses, do not the rules create gross income?
Answer: No. The new rules only disallow deductions and, if the reimbursement is not gross income, the individual is not affected. Whether or not a reimbursement is includible in gross income depends on the general rules of prior and continuing law.
One Week Defined
78. Question: How is "one week" determined under these rules?
Answer: One week means seven consecutive days. The day of departure is not counted, but the day of return is.
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Whether it's an "Ass", a Contract, or simply Profits that should have been - no one wants to lose anything!
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