Ann Jorgensen - Page 8

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                    Educational travel.–-No deduction is allowed for                  
               costs of travel that would be deductible only on the                   
               ground that the travel itself constitutes a form of                    
               education (e.g, where a teacher of French travels to                   
               France to maintain general familiarity with the French                 
               language and culture, or where a social studies teacher                
               travels to another State to learn about or photograph                  
               its people, customs, geography, etc.).  This provision                 
               overrules Treas. Reg. sec. 1.162-5(d) to the extent                    
               that such regulation allows deductions for travel as a                 
               form of education.                                                     
               While the statute expressly overrules section 1.162-5(d),              
          Income Tax Regs., the report makes no mention of section 1.162-             
          5(e), Income Tax Regs., which provides, in part, for the                    
          deductibility of a taxpayer's travel expenses if the primary                
          purpose of the travel is to engage in activities that themselves            
          represent deductible education expenses.  A report from the House           
          of Representatives Committee on Ways and Means provides                     
          additional insight into the rationale underlying section                    
          274(m)(2) and further indicates that Congress intended to leave             
          intact the provisions for deductibility under section 1.162-5(e),           
          Income Tax Regs.:                                                           
               The committee is concerned about deductions claimed for                
               travel as a form of "education".  The committee                        
               believes that any business purpose served by traveling                 
               for general educational purposes, in the absence of a                  
               specific need such as engaging in research which can                   
               only be performed at a particular facility, is at most                 
               indirect and insubstantial.  By contrast, travel as a                  
               form of education may provide substantial personal                     
               benefits by permitting some individuals in particular                  
               professions to deduct the cost of a vacation, while                    
               most individuals must pay for vacation trips out of                    
               after-tax dollars, no matter how educationally                         
               stimulating the travel may be.  Accordingly, the                       
               committee bill disallows deductions for travel that can                

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