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Commissioner, T.C. Memo. 1985-414; Evans v. Commissioner, T.C.
Memo. 1981-413. During temporary periods of unemployment, job-
hunting expenses can be considered and deducted as trade or
business expenses if the expenses are incurred during “a
reasonable period of transition” between leaving one position and
obtaining another. Haft v. Commissioner, 40 T.C. 2, 6 (1963);
see also Sherman v. Commissioner, T.C. Memo. 1977-301.
Education expenses may also be deductible trade or business
expenses under section 162(a) if the education for which the
expenses are made maintains or improves the skills required in
the taxpayer’s employment or other trade or business. Sec.
1.162-5(a), Income Tax Regs.
As relevant here, if unemployed, a taxpayer can still be
engaged in a trade or business if he was previously involved in
or actively seeks to return to that trade or business. Haft v.
Commissioner, supra. Amounts spent to prepare for the resumption
of business at some indefinite time are not deductible, and mere
membership in good standing in a profession does not constitute
carrying on of a trade or business. Reisinger v. Commissioner,
71 T.C. 568, 572 (1979) (citing Owen v. Commissioner, 23 T.C.
377, 381 (1954)). An important factor in determining whether a
taxpayer is still in a trade or business during a period of
unemployment is whether the taxpayer’s absence from the trade or
business is temporary or indefinite. See Haft v. Commissioner,
supra; Sherman v. Commissioner, supra.
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