                          T.C. Summary Opinion 2017-71



                         UNITED STATES TAX COURT



                GARY PATRICK JOHNSON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 26957-15S.                         Filed August 30, 2017.



      Gary Patrick Johnson, pro se.

      Christina D. White and Lewis A. Booth, II, for respondent.



                              SUMMARY OPINION


      CARLUZZO, Special Trial Judge: This case was heard pursuant to the

provisions of section 74631 of the Internal Revenue Code in effect when the

petition was filed. Pursuant to section 7463(b), the decision to be entered is not


      1
      Unless otherwise indicated, section references are to the Internal Revenue
Code of 1986, as amended, in effect for the year in issue. Monetary amounts are
rounded to the nearest dollar.
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reviewable by any other court, and this opinion shall not be treated as precedent

for any other case.

      In a notice of deficiency dated July 20, 2015 (notice), respondent

determined a $3,621 deficiency in petitioner’s 2013 Federal income tax. The

deficiency is attributable entirely to the imposition of the section 55 alternative

minimum tax (AMT). Taking into account the income and deductions shown on

petitioner’s 2013 Federal income tax return (return), it is clear that he is liable for

the AMT. He now argues, however, that he overstated the income reported on his

return. According to petitioner, not only is he not liable for an AMT, but he is due

a refund. The issue for our decision is whether petitioner overstated the income

reported on the return.

                                     Background

      Some of the facts have been stipulated and are so found. At the time the

petition was filed, petitioner resided in Texas.

      In 2013 petitioner was employed as an insurance adjuster for Pilot

Catastrophe Services, Inc. (Pilot). As reported on a 2013 Form W-2, Wage and

Tax Statement, issued to petitioner by Pilot, his wages from Pilot for that year

amounted to $131,884, which included a total of $42,812 for per diem travel
                                        -3-

allowances for lodging, meals, and incidental expenses he paid or incurred in

connection with his employment (per diem allowances).

       Petitioner’s return, which he prepared, was filed on October 14, 2014. As

relevant here, the return includes the following items: (1) the wage income shown

on the above-referenced Form W-2; (2) a personal exemption deduction; (3) a

dependency exemption deduction; (4) a $5,660 itemized deduction for State and

local real property tax; and (5) a $27,796 miscellaneous itemized deduction for

unreimbursed employee business expenses (after the application of the 2%

limitation prescribed in section 67(a)). Petitioner’s return does not include a Form

6251, Alternative Minimum Tax--Individuals, and the income tax liability

reported on petitioner’s return does not include the AMT.

       In the notice and as noted, respondent determined a $3,621 deficiency in

petitioner’s 2013 Federal income tax attributable entirely to the imposition of the

AMT.

                                    Discussion

       Other than to note that section 55 imposes an AMT, defined as the excess (if

any) of the “tentative minimum tax” over the regular tax, we need not burden this

opinion with a discussion explaining how the AMT works or whether respondent

properly computed the amount of the AMT here in dispute; petitioner does not
                                        -4-

claim that the items as reported on his return do not give rise to an AMT or raise a

credible challenge to the manner in which respondent has computed it.2 Instead,

petitioner argues that Pilot should not have treated the per diem allowances as

includable in his taxable income. In support of his position, petitioner submitted a

“revised” return. The income shown on the revised return does not include the

portion of his wages from Pilot attributable to the per diem allowances. Not

surprisingly, the reduction in petitioner’s “tentative minimum tax” and “regular

tax” as shown on the revised return eliminates the deficiency here in dispute. As it

turns out, petitioner’s 2013 Federal income tax liability depends upon whether the

per diem allowances are includable in his income.

Are the Per Diem Allowances Includable in Petitioner’s Income?

      The treatment of payments received by an employee subject to the

employer’s employee business expense reimbursement plan depends upon whether

the plan is an accountable plan or a nonaccountable plan. If the expenses are

reimbursed by the employer pursuant to an accountable plan, then the reimbursed

amount is excluded from gross income and is not considered wages or other


      2
        Petitioner suggests that miscellaneous itemized deductions should not be
excluded from the computation of a taxpayer’s tentative minimum taxable income,
but his suggestion is entirely inconsistent with the express statutory scheme and is
rejected without further comment. See secs. 56(b)(1)(A)(i), 67(b).
                                        -5-

compensation. Sec. 1.62-2(c)(4), Income Tax Regs. But if the reimbursement is

not made under an accountable plan, then the amount of the reimbursement is

treated as wages and is includable in the employee’s gross income. Sec. 1.62-

2(c)(5), Income Tax Regs.

      To qualify as an accountable plan, the plan must: (1) have a business

connection; (2) require substantiation of expenses; and (3) require the return of

amounts exceeding expenses incurred. Sec. 1.62-2(d), (e), and (f), Income Tax

Regs. It would appear from what has been presented that petitioner was entitled to

the per diem allowances regardless of whether he paid or incurred any qualifying

expense relating to the allowances or whether he could substantiate that expense.

Consequently, the per diem allowances were not paid to petitioner pursuant to an

accountable plan. It follows that the per diem allowances are properly includable,

and were in fact included, in petitioner’s 2013 income. Our conclusion on this

point, of course, is supported by the fact that Pilot obviously considered the

reimbursement plan a nonaccountable plan as the company treated the

reimbursements as wages.

      Petitioner’s claim that the per diem allowances should not have been

included in his 2013 income is rejected. Otherwise, respondent’s computation of
                                       -6-

the AMT here in dispute properly excludes the employee business expense

deduction (and other deductions) claimed and allowed on petitioner’s 2013 return.

      That being so, petitioner’s 2013 Federal income tax liability includes the

AMT, and respondent’s determination to that effect is sustained.

      To reflect the foregoing,


                                                   Decision will be entered

                                             for respondent.
