Nurse takes IRS to school

[veritas]

http://online.wsj.com/article/SB10001424052748703535104574646582965101664.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

[Zee]

Very surprising, especially since there have been so many rulings denying this deduction. My guess is there's more to the story. For example, if the nurse was taking MBA classes with the goal of becoming more involved in administrative duties, etc as a head nurse, etc. (if that's what a head nurse does).

[travis bickle]

Read the TC decision

Very surprising, especially since there have been so many rulings denying this deduction. My guess is there's more to the story. For example, if the nurse was taking MBA classes with the goal of becoming more involved in administrative duties, etc as a head nurse, etc. (if that's what a head nurse does).

The actual TC decision gives several different scenarios where the expenses are allowed, and where the expenses are not allowed.

Obviously, one of the criterion is the employment capacity of the individual both before and after the MBA/HCM is obtained.

[erchess]

Link to Decision

I could not make work what I thought was supposed to be a link to the decision. Can anyone post a link to the decision?

[New York Enrolled Agent]

I could not make work what I thought was supposed to be a link to the decision. Can anyone post a link to the decision?

Go to the TC website: www.ustaxcourt.gov

Click on opinions search - input Summary case 2009-182

BTW, never get too excited about a Summary case. The IRC specifically says they have no value as precedent.

[JoshinNC]

Well, I may have found a new deduction

Under the premise set forth in this ruling my wife's MBA is deductible, but my Master's in Accounting is not.

My wife is the payroll and bookkeeping administrator for our firm, as well as managing the office finances. She also owns 51% of the firm. She and I both have a BS in Accounting. She is currently pursuing an MBA. She has no plans to sit for the CPA exam or any other professional designation.

I am currently pursuing a Master's in Accounting w/ a concentration in Taxation. Upon completion of enough graduate hours I plan to sit for the CPA exam (NC requires a minimum number of graduate hours to sit for the exam).

Under this decision (I know, it can't be used for precedence, but the theory is still valid) her tuition is deductible as an unreimbursed ee expense, while mine is not.

Thoughts?

[AuditorTurnedGood]

Would you

be able to run it through your business as continuing ed? Or, perhaps, take the tuition and fees deduction? I'm wrestling with the same set of questions for my Masters in Accounting. Seems like it should be deductible someplace.

ATG

[gkaiseril]

Very carefully read the rulings and the regulations.

If you are established in a profession, courses you take to improve your skills and do not qualify you for a new profession or license are deductible.

If you are a practicing tax preparer, account, public account, CPA, or attorney then taking a MS in Taxation or MBA is not preparing you for a new profession and does not lead to a licensed occupation. And it should not be disqualified from a deduction. You are adding to your job skills. Yes the training may open new opportunities but that alone is not enough to exclude the course from the deduction.

If you are not in an accounting position or legal practice, then the MS in Taxation will prepare you for a new profession.

Now if you complete the course and take a position that requires the MS in Taxation, the IRS could argue that you took this course of study for that job. So work for 6 months to a year and do not seek new employment after completing your course of studies.

And if you can deduct the education expenses, as an owner you may need to use Schedule A as a personal expense and not a business expense.

But if you take the phrase 'qualifies one for a new profession or occupation' is interpreted broad enough, NO deduction should ever be allowed! And the nurse could go out be a comic book store manager or a hospital administrator with that MBA and therefore should not have been allowed any deduction!

[taxxcpa]

Deducting MBA

The IRS questioned my deduction for MBA expenses several years ago. At the time
I was a Gas Revenue Analyst and my job required me to analyze contracts,
government regulations and accounting data to determine that my company received
and paid the proper amounts under gas sales and processing agreements.

The agent accepted my explanation that I took the courses "to improve my skills
in my present position".