Flying on a Wing and on a Prayer

The Corporate Counselor
In its zeal to eradicate perceived abuses and further clip the wings of executives who, based on press reports, took great pleasure in using the company’s airplane for personal purposes, Congress amended section 274(e)(2) of the Internal Revenue Code in the American Jobs Creation Act of 2004 (AJCA). Effective on the date of enactment (Oct. 22, 2004), these amendments effectively reversed the decisions of the Tax Court and Eighth Circuit in Sutherland Lumber-Southwest, Inc. v. Commissioner, 114 T.C. 197 (2000), aff’d 255 F.3d 495 (8th Cir. 2001), acq. AOD 2002-02 (Feb. 11, 2002), and prompted the Internal Revenue Service to issue guidance containing a myriad of rule changes and hinting at others, leaving tax practitioners scratching their heads and companies running for cover.  Marianna Dyson, Mike Lloyd and Lee Spence co-authored this article.
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