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that transportation costs qualify as higher education expenses.14
Section 1.221-1(e)(2)(i), Income Tax Regs., defines qualified
higher education expenses as the “cost of attendance (as defined
in section 472 of the Higher Education Act of 1965, 20 U.S.C.
1087ll, as in effect on August 4, 1997)” and further states that
consistent with 20 U.S.C. sec. 1087ll (Supp. IV 1998) the cost of
attendance includes an allowance for transportation.15
For purposes of section 72(t)(2)(E), however, section
529(e)(3) defines qualified higher education expenses as tuition,
fees, books, supplies, equipment, and room and board. Clearly,
transportation expenses are not included within this definition.
With regard to the definition of qualified higher education
expenses under section 529(e)(3)(B)(ii), the term “cost of
attendance” is applicable only in the context of determining the
minimum allowance for room and board expenses. On brief,
respondent admitted that respondent’s position was misguided by
section 1.221-1(e)(2)(i), Income Tax Regs. Thus, respondent’s
misconceived concession was an erroneous representation of law.
As such, equitable estoppel does not bar respondent from changing
respondent’s position to correct a mistake of law unless
14 Sec. 221 and the regulations thereunder set forth the
criteria to deduct interest paid on qualified education loans.
15 The Higher Education Act of 1965 sec. 472, currently
codified at 20 U.S.C. 1087ll(2) (2000), provides that the term
“cost of attendance” means an allowance for transportation as
determined by the institution.
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Last modified: May 25, 2011