IV. Authority for Conclusions
A. Per I.R.C. §162(a), in order for Mr. Boston to deduct miscellaneous itemized expenses on Schedule A of his 2013 tax return the deduction must be ordinary and necessary expenses paid or incurred during the tax year in the course of carrying on any trade or business.
Treas. Reg. §1.162-5 clarifies the Code section for the purpose of expenses for education. Treas. Reg. §1.162-5(a) describes the two situations in which education expenses are allowed to be miscellaneous itemized deductions.
1. Treas. Reg. §1.162-5(a)(1) states that expenditures made by a taxpayer individual for education are deductible as ordinary and necessary expenses if the education maintains or improves skills required by the taxpayer in …show more content…
C.I.R., T.C. Summ Op. 2009-182 (U.S. Tax Court, 12/02/2009) (WestlawNext), the U.S. Tax Court determined that the Singleton, a Maryland nurse, was eligible to deduct her M.B.A. expenses. The court ruled that Singleton was able to deduct her expenses, because her M.B.A. improved her preexisting skills that she developed over 20 years of directly related work experience.
Mr. Boston’s facts and circumstances are similar to the Singleton case. In both situations the taxpayers do not have direct business jobs, such as accounts or finance directors, but they both possess business skills developed over years of direct work experience. Mr. Boston’s four years as an Athletic Director and member of the Board of Trustees give him direct work experience related to his M.B.A. program. Also, both taxpayers are residents of Maryland. Mr. Boston can conclude that he deducted his expenses based off of this case even though it is not deemed to be precedent.
C. We determine that Mr. Boston’s education expenditures do not lead to a new trade or business. Mr. Boston was an academic administrator before and after earning his M.B.A. Before his M.B.A. he was an Athletic Director for four years and after he accepted employment as Director of Administration in the Business School of a private university. Although Mr. Boston accepted a new job with a new job title, he has maintained the same trade or …show more content…
In IRS Priv. Ltr. Rul. 1987-14-064 [01/08/1987], a taxpayer was unable to obtain a leave of absence from his employer to pursue his M.B.A. degree. In response to this denial he resigned from his position. The court ruled that the M.B.A. expenses were not deductible due to the taxpayer not carrying on a trade or business while incurring the expenses. Even though the taxpayer was employed over the summer of his M.B.A. program, the court ruled the summer job and his current employment were not related.
Mr. Boston’s facts and circumstances partially match those of the private letter ruling. Both Mr. Boston and the taxpayer resigned from their positions in order to pursue their M.B.A. degrees. Mr. Boston’s case differs however, because his employment of a year while pursuing his M.B.A. degree matches his current employment. Therefore, Mr. Boston is deemed to have pursue his M.B.A. during a temporary absence not indefinite
A. Per I.R.C. §162(a), in order for Mr. Boston to deduct miscellaneous itemized expenses on Schedule A of his 2013 tax return the deduction must be ordinary and necessary expenses paid or incurred during the tax year in the course of carrying on any trade or business.
Treas. Reg. §1.162-5 clarifies the Code section for the purpose of expenses for education. Treas. Reg. §1.162-5(a) describes the two situations in which education expenses are allowed to be miscellaneous itemized deductions.
1. Treas. Reg. §1.162-5(a)(1) states that expenditures made by a taxpayer individual for education are deductible as ordinary and necessary expenses if the education maintains or improves skills required by the taxpayer in …show more content…
C.I.R., T.C. Summ Op. 2009-182 (U.S. Tax Court, 12/02/2009) (WestlawNext), the U.S. Tax Court determined that the Singleton, a Maryland nurse, was eligible to deduct her M.B.A. expenses. The court ruled that Singleton was able to deduct her expenses, because her M.B.A. improved her preexisting skills that she developed over 20 years of directly related work experience.
Mr. Boston’s facts and circumstances are similar to the Singleton case. In both situations the taxpayers do not have direct business jobs, such as accounts or finance directors, but they both possess business skills developed over years of direct work experience. Mr. Boston’s four years as an Athletic Director and member of the Board of Trustees give him direct work experience related to his M.B.A. program. Also, both taxpayers are residents of Maryland. Mr. Boston can conclude that he deducted his expenses based off of this case even though it is not deemed to be precedent.
C. We determine that Mr. Boston’s education expenditures do not lead to a new trade or business. Mr. Boston was an academic administrator before and after earning his M.B.A. Before his M.B.A. he was an Athletic Director for four years and after he accepted employment as Director of Administration in the Business School of a private university. Although Mr. Boston accepted a new job with a new job title, he has maintained the same trade or …show more content…
In IRS Priv. Ltr. Rul. 1987-14-064 [01/08/1987], a taxpayer was unable to obtain a leave of absence from his employer to pursue his M.B.A. degree. In response to this denial he resigned from his position. The court ruled that the M.B.A. expenses were not deductible due to the taxpayer not carrying on a trade or business while incurring the expenses. Even though the taxpayer was employed over the summer of his M.B.A. program, the court ruled the summer job and his current employment were not related.
Mr. Boston’s facts and circumstances partially match those of the private letter ruling. Both Mr. Boston and the taxpayer resigned from their positions in order to pursue their M.B.A. degrees. Mr. Boston’s case differs however, because his employment of a year while pursuing his M.B.A. degree matches his current employment. Therefore, Mr. Boston is deemed to have pursue his M.B.A. during a temporary absence not indefinite