Yuanqiang Zhang - Page 5

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               Petitioner filed an individual Federal income tax return for           
          taxable year 2000 using a Form 1040NR, U.S. Nonresident Alien               
          Income Tax Return.  On this return, petitioner claimed a                    
          miscellaneous itemized deduction of $34,126.  The expenses for              
          which this deduction was claimed were as follows, before                    
          application of the section 67(a) limitation on miscellaneous                
          itemized deductions:                                                        
                    M.B.A. tuition               $29,860                              
                    Books and school supplies      2,286                              
                    Computer depreciation            495                              
                    Job search expenses              869                              
                    Summer job expenses              918                              
                    Travel to school                 552                              
                    34,980                                                            
          In the statutory notice of deficiency, the sole adjustment was              
          respondent’s disallowance of this deduction.  Petitioner concedes           
          $169 of the M.B.A. tuition and $50.86 of the computer                       
          depreciation, and he concedes the entire amounts of the job                 
          search, summer job, and travel expenses.  The amounts remaining             
          at issue all relate to expenses petitioner allegedly incurred in            
          connection with the M.B.A. program.                                         
               In general, expenses which are ordinary and necessary in               
          carrying on a trade or business are deductible in the year in               
          which they are paid.  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)                   






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