Section 274(e)(2) operates as an exception to the general entertainment deduction disallowance
rule of section 274(a).
Pursuant to the loss disallowance
rule calculation in Treasury Regulations section 1.1502-20(a), the "duplicated loss" exceeded the claimed "economic loss." Thus, Rite Aid was denied its deduction for a loss on the sale.
"All told, this Commission finds the disallowances
and affirms the modification in some NDs" the three-man panel stated.
Thus, if a financial institution has a qualified tax-exempt obligation that meets these four requirements, the interest expense deduction is subject to a 20% (instead of 100%) disallowance
We do not agree, however, that the potential disallowance
of a tax position should be accounted for as though the tax position were never claimed.
A total of P2,067,686,833.22 in transactions have been issued notices of disallowances
which are now under appeal before the COA Commission Proper.
In its apparent zeal both to issue guidance quickly and also to change company behavior by imposing a deduction disallowance
on all "entertainment" use of company aircraft by "specified individuals," the IRS conjured a methodology for allocating expenses to any entertainment use that can yield surprising results.
Citing Audit Rule IV Section 4 of the 2009 Revised Rules of Procedure, the audit agency said it is required to issue notices of disallowance
and charges whenever there are differences arising from the settlement of accounts.
The Commission on Audit (COA) issued two separate rulings in May on petitions for review of notices of disallowance
that it earlier issued for PhilHealth.
The new regulations represent the government's latest response to the Federal Circuit's decision in Rite Aid, 255 F3d 1357 (2001), which held that the "duplicated loss" factor of the loss disallowance
rule (LDR) found in former Regs.