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the remitted fellowship proceeds constitute an employee business
expense, deductible on Schedule A. See Butchko v. Commissioner,
T.C. Memo. 1978-209, affd. 638 F.2d 1214 (9th Cir. 1981) (holding
taxpayer's payment to employer for cash register shortages
resulted in employee business expense).
(2) Remaining Expenses
There is some confusion with respect to the amount of
expenses remaining in dispute. On Schedule C of the amended
return, petitioners claimed expenses related to petitioner's
research and writing in the amount of $33,481. On the basis of
arguments presented prior to trial, petitioners now appear to
claim expenses relating to petitioner's activities in the amount
of $29,600, the amount allowed by respondent. See supra p. 11 &
note 2 to table. In any event, petitioners have offered no proof
that they are entitled to deductions in excess of $29,600, and we
sustain respondent's determination to that extent.
Respondent determined that petitioner incurred the allowable
expenses as an employee of UConn. Accordingly, respondent argues
that petitioner's allowable work-related expenses are deductible
as miscellaneous itemized deductions under section 67. In
contrast, petitioners contend that petitioner was in the separate
trade or business of writing scholarly materials when he incurred
the expenses. In so doing, petitioners argue that petitioner's
activities were not related to his employment at UConn.
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