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Proposed regulations on entertainment use of company aircraft: still a tough IRS line, but notice 2005-45 is eased.
- Article from:
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Tax Executive
- Article date:
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July 1, 2007
- Author:
- Dyson, Marianna G.; Hoover, John B.
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Copyright informationCOPYRIGHT 2007 Tax Executives Institute, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The passage of two years since the issuance of Notice 2005-45 has not significantly dampened the enthusiasm of the Internal Revenue Service in its mission to stamp out executives' entertainment use of company aircraft. (1) The newest tool in the IRS's arsenal is the deduction limitation set forth in amended section 274(e)(2) of the Internal Revenue Code. (2) That limitation, which the IRS interprets as conditioning a company's deductions for aircraft expenses on each executive's reason for being on the flight, rather than the primary purpose of the flight, arises out of legislative changes to section 274(e)(2) by the American Jobs Creation Act of 2004. (3)
Taxpayers who ...