SECTION 1. PURPOSE

This revenue procedure updates Rev. Proc. 2005–10, 2005–3 I.R.B. 341, and provides rules under which the amount of ordinary and necessary business expenses of an employee for lodging, meal, and incidental expenses, or for meal and incidental expenses, incurred while traveling away from home are deemed substantiated under § 1.274–5 of the Income Tax Regulations when a payor (the employer, its agent, or a third party) provides a per diem allowance under a reimbursement or other expense allowance arrangement to pay for the expenses. In addition, this revenue procedure provides an optional method for employees and self-employed individuals who are not reimbursed to use in computing the deductible costs paid or incurred for business meal and incidental expenses, or for incidental expenses only if no meal costs are paid or incurred, while traveling away from home. Use of a method described in this revenue procedure is not mandatory, and a taxpayer may use actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence for proper substantiation. This revenue procedure does not provide rules under which the amount of an employee’s

is issued (or deemed to be issued) by the transferred corporation to the transferee foreign corporation in connection with subsequent transfers of property from the transferee foreign corporation to the transferred corporation shall not be taken into account.

Example 4 . (i) Facts . USP, a domestic corporation, owns 100% of the stock of two foreign corporations, FC1 and FC2. In Year 1, USP transfers 100% of the stock of FC1 to FC2 in an exchange described in section 351 and, pursuant to Treas. Reg. §§ 1.367(a)–3(b)(1)(ii) and 1.367(a)–8, enters into a gain recognition agreement with respect to such transfer. In Year 2, FC2 transfers property to FC1 in exchange for newly issued FC1 stock. In Year 4, FC2 distributes all of its FC1 stock to USP in a liquidating distribution that qualifies under sections 332 and 337.

(ii) Result . In determining whether the gain recognition agreement entered into by USP is terminated, or in the alternative triggered, only the stock of FC1 transferred by USP to FC2 in Year 1 is considered in determining whether immediately following the section 332 liquidation, USP’s basis in the transferred stock is less than or equal to the basis that it had in such stock immediately prior to the initial transfer that necessitated the gain recognition agreement. Thus, the basis in the FC1 stock issued to FC2 in Year 2, in exchange for property, is not taken into account. The result in this example would remain the same if, instead of FC1 actually issuing stock to FC2 in exchange for the transferred property, FC1 was deemed to issue stock to FC2 in exchange for such property.