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Educational costs incurred to maintain or improve skills
required by the individual’s trade or business are deductible as
ordinary and necessary business expenses, unless they are
incurred to meet minimum educational requirements for a
taxpayer’s trade or business or qualify the individual in a new
trade or business. Sec. 1.162-5(a) and (b), Income Tax Regs.
Prior to taking her 1995 and 1996 courses at UCF, Mrs.
Managan performed environmental audits for MRG. The chemistry
degree, however, qualified her for a new trade or business.
Indeed, she used the degree to obtain employment in a laboratory,
in 1997.
We need not address the burden of proof relating to this
issue because the documentary evidence and Mrs. Managan’s
testimony established that Mrs. Managan’s UCF classes qualified
her for a new trade or business. Accordingly, petitioner is not
entitled to deduct Mrs. Managan’s 1995 and 1996 educational
expenses.
III. The Boat
Respondent determined that petitioner is required to
capitalize legal fees paid to obtain a lobster fishing license
from Honduras and expenses (i.e., cost of utilities and moving
the partially completed vessel) relating to building the Dinky
Dau. Petitioner contends that these are deductible business
expenses.
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Last modified: May 25, 2011