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Section 162 generally allows a deduction for expenses which
are ordinary and necessary in carrying on a trade or business.
Sec. 162(a). Such expenses may include educational expenses paid
in carrying on the trade or business of being an employee. Sec.
1.162-5, Income Tax Regs. To be deductible, such expenses must
be for education which (1) maintains or improves skills required
by the taxpayer in his employment or other trade or business, or
(2) meets the express requirements of the taxpayer’s employer, or
of applicable law or regulations, imposed as a condition to the
retention by the taxpayer of an established employment
relationship, status, or rate or compensation. Sec. 1.162-5(a),
Income Tax Regs. There is nothing in the record which indicates
that petitioner’s engineering education fell within one of these
two categories: There is no suggestion that the education
maintained or improved skills which petitioner used in his duties
at NSBE--fundraising and handling career fairs--or that it was
required in the context of his established employment
relationship, status, or rate of compensation.
Furthermore, expenses which fall into either of the above
two categories nevertheless are not deductible if the education
(1) is required in order to meet the minimum educational
requirements for qualification in the taxpayer’s employment or
other trade or business, or (2) qualifies the taxpayer for a new
trade or business. Sec. 1.162-5(b), Income Tax Regs. The
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Last modified: May 25, 2011