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training, to ensure that the new pilots were proficient with its
aircraft, and to ensure the safety of its passengers. The
evidence in the record clearly establishes that petitioner
incurred unreimbursed expenses as a requirement of his employment
as a pilot with CE.
The expense petitioner incurred for new-hire training is an
unreimbursed employee expense. The miscellaneous business
expense deduction, which includes unreimbursed employee expenses,
to which petitioner is entitled is deductible on petitioner's
Schedule A, Itemized Deductions. Sec. 162(a); see also sec.
1.162-17, Income Tax Regs. As an itemized deduction, it is
subject to the 2-percent floor; that is, only the amount in
excess of 2-percent of petitioner's adjusted gross income may be
deducted. Sec. 67(a); sec. 1.67-1T(a)(1)(i), Temporary Income
Tax Regs., 53 Fed. Reg. 9875 (Mar. 28, 1988).
Thus, we find that respondent’s determination denying
petitioner’s deductions was made in error. We hold that the
expense petitioner incurred for new-hire training was a
deductible unreimbursed business expense.
Reviewed and adopted as the report of the Small Tax Case
Division.
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