Rev. Rul. 57-46

Advice has been requested whether the `statutory subsistence allowance' provided under Act 234, Acts of South Carolina, 1955, an Act to Provide for a Subsistence Allowance From the Amounts Appropriated by Acts of the General Assembly for Police Officials and All Commissioned Law Enforcement Officers, approved by the Governor May 25, 1955, is excludable from gross income as `a statutory subsistence allowance' within the meaning of section 120 of the Internal Revenue Code of 1954.

Act 234, supra , provides that beginning with the fiscal year 1955-56, of the amounts appropriated by Acts of the General Assembly for police officials and all commissioned law enforcement officers, the sum of five dollars a day for each regular workday shall be designated as `a statutory subsistence allowance.'

Pursuant to the South Carolina law, highway patrolmen are assigned territories which allow them to live at home to the extent that they eat all three meals at home each day. No expenses are incurred while on duty, as State-owned automobiles are furnished, together with all gas, oil and repairs. If, at any time, a particular patrolman is assigned temporary duty away from his station, such patrolman is reimbursed for actual subsistence in an amount not to exceed $7.50 per day while in the State or $10 when outside the State. Act 234, supra , does not provide for any kind of expenses incident to the performance of police duty, the travel allowance for expenses up to $7.50 or $10 per day for temporary duty assignments away from an official station having been provided for in earlier legislation. Act 234 has not affected the amount of money received by patrolmen. It merely designates that, of the amount appropriated for a patrolman's salary, the amount of $5 a day for each regular workday or $30 each week represents a statutory subsistence allowance. No concurrent laws have been enacted to specifically increase or decrease the rates of pay of highway patrolmen.

Section 61(a) of the Internal Revenue Code of 1954 provides for the inclusion in gross income of amounts received as compensation for services, including fees, commissions, and similar items.

Section 120(a) of the Code provides that gross income does not include any amount received as a statutory subsistence allowance by an individual who is employed as a police official by a State, a Territory, or a possession of the United States, by any political subdivision of any of the foregoing, or by the District of Columbia.

Section 120(b) provides that the amount to which subsection (a) applies shall not exceed $5 per day and that, if any individual receives a subsistence allowance to which subsection (a) applies, no deduction shall be allowed under any other provision of Chapter 1 for expenses in respect of which he has received such allowance, except to the extent that such expenses exceed the amount excludable under subsection (a) and the excess is otherwise allowable as a deduction under Chapter 1.

The term `statutory subsistence allowance' as used in section 120 of the Code is an established amount, apart from salary or other compensation, which is authorized to be paid to an individual who is employed as a police official for meals and other incidental expenses in connection with his duties, and must accordingly be designated to provide for the cost of subsistence expenses incident to the performance of police duties. The allowance under Act 234, supra , does not satisfy such a test. The mere designation of an amount paid to a police officer as a `subsistence allowance' will not serve to exclude such amount within the meaning of section 120 of the Code.

Accordingly, it is held that the so-called `subsistence allowance' of $5 per day payable under Act 234, Act of South Carolina, 1955, is not a `statutory subsistence allowance' within the meaning of section 120 of the Code but constitutes compensation for services rendered and is includible in gross income under section 61(a) of the Code. In this connection see Revenue Ruling 55-475, C.B. 1955-2, 37.