Business Travel Per Diem Rates

The IRS released the 2014-2015 per diem rates for substantiating employees’ business expenses under IRC Sec. 274(d) for lodging, meals, and incidental expenses incurred while traveling away from home. The Meal and Incidental Expense (M&IE) rates for the transportation industry remain unchanged at $59 for travel in the continental U.S. and $65 outside the continental U.S. The per diem for travel to high-cost localities increases by $8 to $259 ($65 for M&IE), while the rate for travel to other localities increases by $2 to $172 ($52 for M&IE). The incidental-expenses-only rate remains at $5 per day. The updated rates and list of high-cost locations apply to per diem allowances paid to employees after 9/30/14. Notice 2014-57, 2014-41 IRB

A taxpayer received “thank you” award points toward an airline ticket for setting up a bank account at Citibank, which he redeemed for a restricted coach class airline ticket. The bank issued a Form 1099-MISC reporting the $668 value of the airline ticket, which the taxpayer failed to include as income on his tax return. When challenged by the IRS, the taxpayer claimed he didn’t know anything about the award. However, bank records and a bank official’s affidavit showed that the taxpayer received the award. Because the award was given in exchange for depositing money in a bank account, the Tax Court held that it should be treated like interest income. Since the taxpayer didn’t show any evidence that the flight was worth less than $668, that value was the amount to be includible as income. Parimal H. Shankar, 143 TC No. 5. (Tax Ct.).

IRC Sec. 501(c)(7) provides an exemption from federal income tax for clubs organized substantially for pleasure, recreation, and other nonprofitable purposes if no part of the net earnings inure to the benefit of any private shareholder. The IRS privately ruled that a virtual sorority, organized for students of an online for-profit university for the primary purpose of encouraging academic and professional success, didn’t qualify as an exempt social club under IRC Sec. 501(c)(7) . In reaching this conclusion, the IRS relied on certain 1950’s and 1970’s revenue rulings, which determined that a club contemplates the commingling of individuals, personal contacts, and fellowship. Furthermore, the previous rulings determined the commingling of members must play a material part in the organization’s life. The IRS concluded that the online sorority failed to meet the definition of a clubbecause it didn’t engage in face-to-face meetings and gatherings as a primary activity.
Ltr. Rul. 201434022