- 6 - required by an individual in his or her employment. Sec. 1.162- 5(a)(1), Income Tax Regs. They are not deductible, however, if the education is undertaken either to meet the minimum requirements for that trade or business or to qualify for a new trade or business. Sec. 1.162-5(b)(2) and (3), Income Tax Regs. Respondent does not dispute the amounts claimed as expenses by petitioners. Rather, respondent asserts that petitioner's educational expenses led to petitioner's qualification for a new trade or business and thus are nondeductible. Petitioners contend that petitioner's coursework did not qualify her for a new trade or business. Petitioners' argument, briefly stated, is that petitioner's trade or business is the field of music, and that music therapy is a specialization within that field. Consequently, petitioner's educational expenses are for additional specialization or improvement of those skills, and are thus deductible under section 162. It is well established that we must employ objective standards in applying section 1.162-5(b)(3), Income Tax Regs. Bodley v. Commissioner, 56 T.C. 1357, 1360 (1971). In evaluating whether the "new trade or business" exception applies, this Court uses a common sense approach. We compare the types of tasks and activities the taxpayer was qualified to perform before she acquired the education at issue and those she is qualified to perform afterwards. If substantial differences exist in the tasks and activities of the various occupations or employments,Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011