Accountant and CPA not related professions?

[Burke]

How about someone starting a new career into insurance. Is the cost of the course, testing fee and application fee deductible on his or her new Sch C as a Insurance Agent?
What about the same Ins Agent that already has a Life insurance license and wants to add a health inurance? Seems to me to be very similar to the Dentist wanting to expand in into Ortho.

1. The cost of the course, testing fee and app fee to qualify or license a new ins agent is not deductible.
2. The addl fee to sell health insurance for an already-licensed agent would be.

[veritas]

Well

Actually, I really don't believe so. The original Reg §1.162-5 was written in 1958 and was amended in 1967. No change since that time.

The Courts (ex Sandt CA3) agreed with the IRS on the "primary purpose" of education in the 1958 regulations. The 1967 amendment sought to offer more objective criteria, removed that concept of subjective intent and also stated "all teaching and related duties shall be considered to involve the same general type of work". Those are the words contained in the regulations contained in TD 6918 published on 5/1/1967.

that shoots down that theory.

Thanks NYEA

[New York Enrolled Agent]

Do I detect the IRS was losing on this and wrote the reg to put the kabosh on those sneaky accountants?

Actually, I really don't believe so. The original Reg §1.162-5 was written in 1958 and was amended in 1967. No change since that time.

The Courts (ex Sandt CA3) agreed with the IRS on the "primary purpose" of education in the 1958 regulations. The 1967 amendment sought to offer more objective criteria, removed that concept of subjective intent and also stated "all teaching and related duties shall be considered to involve the same general type of work". Those are the words contained in the regulations contained in TD 6918 published on 5/1/1967.

[Gary2]

Do I detect the IRS was losing on this and wrote the reg to put the kabosh on those sneaky accountants?

A plausible speculation. Is there an easy way to track down the IRS's report (if any) associated with specific regulations? I know I've often seen IRS reports of the form "Public comment said X, we decided .5X+Y for these reasons...," but I don't know if there's a reverse index to those things if all you have is the regulation.

[veritas]

Hmmm

Actually, it is not the courts that have made this determination - the IRS has. Reg. §1.162-5(b)(3) specifically shows this as an example of not constituting a new trade or business.

Do I detect the IRS was losing on this and wrote the reg to put the kabosh on those sneaky accountants?

[New York Enrolled Agent]

Nevertheless, one begins to appreciate the imperfections in our system of law when you learn that there are court cases saying that for a teacher, becoming a principal is not a new profession.

Actually, it is not the courts that have made this determination - the IRS has. Reg. §1.162-5(b)(3) specifically shows this as an example of not constituting a new trade or business.

[okie1tax]

Education

@snaggletooth, "And of course, it follows that tuition would be a "rich man's tax break". God forbid. Time for the tax code to swoop down and disallow this specifically, and leaving the other conditions of educational deduction alone to promote an aura of supporting those who wished to better themselves on their job."
That is why I was glad to see the Lifetime Learning Credit be made available. Someone wants to improve their chance to increase their income, and pay more taxes, give them a little incentive!

[Snaggletooth]

Minimum Requirements

Deep within my almost-lost memory comes forth a disallowance that says "Education is not deductible if it is associated with the minimum requirements for a new job or profession. The CPA exam could not conceivably be considered as anything but.

I think the code for this was written years ago to prevent a typical college student from deducting his(her) tuition, as so many jobs and professions have as their "minimum" requirements a B.A. or B.S. or equivalent. There was a time when college was considered by the general population as a "rich man's domain" where sons and daughters could go and become filthy rich like their parents. However wrong you perceive this to be, this was widely believed across America at one time. If you are old like me, you may remember this general feeling among large segments of the population.

And of course, it follows that tuition would be a "rich man's tax break". God forbid. Time for the tax code to swoop down and disallow this specifically, and leaving the other conditions of educational deduction alone to promote an aura of supporting those who wished to better themselves on their job.

[Gary2]

Much of the point of the question is understanding that the "doesn't qualify you for a new profession" rule acts as a veto over "ordinary and necessary for my current profession," no matter how strong a case for the latter you can make.

Nevertheless, one begins to appreciate the imperfections in our system of law when you learn that there are court cases saying that for a teacher, becoming a principal is not a new profession.

The dentist/orthodontist distinction is easier to understand. A dentist (as far as I know) isn't required to get any additional licenses in order to perform orthodontic work. It's the idea of education related to a specific professional license that usually shows up (at least on exams) as triggering the "no new professions" rule.

[ChEAr$]

No - because the CPA review course is supposed to prepare you for passing a licensing exam - not continuing education of current services you're providing to clients in the normal course of business.
In addition - if you're doing strictly tax work - the CPA exam is geared mainly for financial accounting standards and auditing standard comprehension - very little is tested on income taxes.

Ah, I missed that about it being a cpa review course.

Heck, and I even taught part of the Becker course once upon a time.

[joanmcq]

Look, a CPA is regarded as a different profession than a just plain accountant. A CPA prep course is not a series of classes in different subjects; it's an intensive course designed to get you through the CPA exam with a passing grade. It's not deductible. Ever.

Same with a Bar prep course; an attorney must pass the Bar to be licensed to practice as an attorney. an attorney is a different profession than someone with a law degree that has not passed the bar. It is the same with the CPA license and a nonlicensed accountant. The CPA license allows the CPA to do things, like sign financial statement audits, that an nonlicensed accountant cannot do, even if the to-be CPA is working in a job that will not change one iota after passing. Think of an law degree recipient working as a paralegal who passes the bar but continues working as a paralegal. The pattern of facts is not the job you are doing, but the job you are now qualified to do.

The dentist in the example is already a dentist-he or she is learning a specialty within that profession. Obtaining the medical/dental license is the stepping stone for that profession.

[AZ-Tax]

How About An Ins Agent?

I guess in a way I can see the logic but a related question was brought up in my EA class. Is your EA course and testing fees deductible. The census was that since the IRS is mandating the EA or RTRP license in order to practice tax if you are not a CPA, it becomes a qualify business related deduction.

How about someone starting a new career into insurance. Is the cost of the course, testing fee and application fee deductible on his or her new Sch C as a Insurance Agent?
What about the same Ins Agent that already has a Life insurance license and wants to add a health inurance? Seems to me to be very similar to the Dentist wanting to expand in into Ortho.

[Burke]

It's tricky, IMO. You could also make the same case for the dentist. Orthodonture is a whole new type of practice.

[GradyFinance]

No - because the CPA review course is supposed to prepare you for passing a licensing exam - not continuing education of current services you're providing to clients in the normal course of business.
In addition - if you're doing strictly tax work - the CPA exam is geared mainly for financial accounting standards and auditing standard comprehension - very little is tested on income taxes.

Okay, I see some reason in that, but, how about this- A long time accountant decides to take his profession to the next level. Reasonably that next level would be becoming certified. The question does not state that this accountant is doing strictly tax work. He may be doing no tax work at all but rather possibly only bookkeeping and payroll. He decides to take some CPA classes to begin working his way to the CPA test. That would be a related field in my opinion. But then again, I dont decide tax law.

[Uncle Sam]

No - because the CPA review course is supposed to prepare you for passing a licensing exam - not continuing education of current services you're providing to clients in the normal course of business.
In addition - if you're doing strictly tax work - the CPA exam is geared mainly for financial accounting standards and auditing standard comprehension - very little is tested on income taxes.