John H. Hudgens III - Page 2

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               Respondent determined deficiencies in petitioner's Federal             
          income taxes for the taxable years 1990 and 1991 in the amounts             
          of $641 and $776, respectively.                                             
               After concessions, the sole issue is whether petitioner is             
          entitled to deduct as educational expenses costs incurred                   
          obtaining a master of laws (LL.M.) in taxation under section 162.           
          Petitioner resided in Columbia, South Carolina, at the time he              
          filed his petition.                                                         
                                  FINDINGS OF FACT                                    
               Petitioner graduated from The Citadel in 1984 with a B.S.              
          degree in business administration.  Soon thereafter, petitioner             
          enrolled at the University of South Carolina (USC).  In December            
          1987, petitioner graduated from USC with a J.D. degree and a                
          master's in taxation from the business school.  Petitioner                  
          accepted a position on the tax staff of Arthur Andersen & Co.               
          (Arthur Andersen) in January 1988.  At Arthur Andersen,                     
          petitioner spent approximately 30 to 40 percent of his time                 
          preparing tax returns, 40 to 50 percent researching the tax law,            
          and the remainder consulting clients about tax matters.                     
               In March 1990, petitioner quit his job at Arthur Andersen.             
          After leaving Arthur Andersen, petitioner worked for John Shell             
          Associates, Inc., a temporary accounting firm for 4 weeks.                  
          Petitioner did not plan to rejoin either firm.  He then went on             
          active duty with the National Guard and completed an advanced               




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