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respectively. In the notice of deficiency respondent, among
other things, disallowed the educational expense deductions.
OPINION
Section 162(a) allows a deduction for all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business. Personal expenses are not
deductible. Sec. 262(a). Expenses for education may be
deductible as expenses of a trade or business if certain
requirements set forth in the regulations are met.3 See sec.
1.162-5, Income Tax Regs. As a threshold matter, the statute
requires that a taxpayer incur the educational expenses in
"carrying on" a trade or business. Sec. 162(a).
Whether a taxpayer is engaged in a trade or business and the
nature of that trade or business are questions of fact. Ford v.
Commissioner, 56 T.C. 1300, 1307 (1971), affd. 487 F.2d 1025 (9th
Cir. 1973). A taxpayer may be in the trade or business of being
an employee. Primuth v. Commissioner, 54 T.C. 374, 377 (1970).
The temporary cessation of a trade or business does not preclude
a finding that a taxpayer was carrying on that trade or business
during the period of cessation. Haft v. Commissioner, 40 T.C. 2,
6 (1963). Thus, even an unemployed taxpayer may be considered to
be carrying on a trade or business if the taxpayer was previously
3 Respondent does not contend that petitioner fails to satisfy
the limitations set forth in the regulations concerning the
deduction of costs for entry-level or upward-bound education.
See sec. 1.162-5(b), Income Tax Regs.
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