- 3 -
used for doing so, so I might confront it. * * * Therefore,
my pay is still going on as a technical matter.
THE COURT: I am not sure that the State of New York
would agree with you.
THE WITNESS: They certainly haven’t.
As the Supreme Court has noted, “the ‘familiar rule’ [is]
that ‘an income tax deduction is a matter of legislative grace
and that the burden of clearly showing the right to the claimed
deduction is on the taxpayer.’” INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992). Section 162(a) allows deductions for
“ordinary and necessary expenses * * * in carrying on any trade
or business.” An employee is in a trade or business of being an
employee. See Fogg v. Commissioner, 89 T.C. 310 (1987). Section
212(a) further allows deductions for “ordinary and necessary
expenses * * * for the production or collection of income [or]
for the management, conservation, or maintenance of property held
for the production of income”.
The expenses claimed do not fall within either section
162(a) or section 212(a). Even if we consider these expenses to
be bona fide educational expenses, petitioner admittedly was not
engaged in a trade or business or other income-producing activity
during the time that the expenses were incurred or paid. See
Reisinger v. Commissioner, 71 T.C. 568, 572 (1979) (“Mere
membership in good standing in a profession does not constitute
Page: Previous 1 2 3 4 Next
Last modified: May 25, 2011