ACCT 429 Week 7 Project

ACCT 429 Week 7 - TO: FROM:AliceyaPerkins RE: Facts .Shehasarather largesalesterritory,

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TO:  Professor Tracie Hayes FROM:  Aliceya Perkins RE:  Tax Research Memorandum Assignment 1 Facts Tracey is a sales representative for a national pharmaceutical company. She has a rather  large sales territory, and she makes her rounds to her customers using a company-owned  car over a 16- to 19-hour period of time. During these one-day business trips, Tracey will  pull over in a suitable location (such as a park or a rest stop) and take a short nap in the  backseat of her automobile. Is Tracey entitled to deduct the cost of meals purchased during the trip at issue? No, Tracey is not entitled to deduct the cost of meals purchased during the trip at issue. Analysis 1 § 162 of the Internal Revenue Service Code, regulating trade of business expenses states  that: There shall be allowed as a deduction all the ordinary and necessary  expenses paid or incurred during the taxable year in carrying on any trade  or business, including…traveling expenses (including amounts expended  for meals and lodging other than amounts which are lavish or extravagant  under the circumstances) while away from home in the pursuit of a trade  or business. The precedent of the Tax Court, concerning travel related deductions for meals where rest  is involved, was established in United States v. Correll, 1967, 389 U.S. 299 [ 20 AFTR 2d  5845]. Colloquially known as the overnight rule, the Court previously held that a taxpayer  payer does not qualify as one obliged to sleep or rest simply because the length of his trip  tired him, and he stopped by the side of the road for a brief nap. Furthermore, the Internal  Revenue Service is not obligated to oblige a request of a travel related meal expense  deduction, unless the tax payer can prove that the rest stop is of sufficient duration that it 
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This note was uploaded on 03/01/2012 for the course ACCOUTNING 550 taught by Professor Abner during the Spring '11 term at DeVry Houston.

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ACCT 429 Week 7 - TO: FROM:AliceyaPerkins RE: Facts .Shehasarather largesalesterritory,

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