- 13 - 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.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011