training expense for schedule C

[krav]

A client is employed as a dietician. On the side (he is still working full time for his employer), he is opening his own business in nutrition counseling. He has paid for a lot of training specifically as it pertains to nutrition counseling. My question is since the two occupations are so closely related, can he take all of the training as Schedule C expense? Or would it all be Sch. A expense? Or should it be prorated according to the income between the two jobs? Any thoughts are appreciated!

[Koss]

Expenses

I think you're in a gray area. If you or your client have low risk tolerance, and you want to be certain that it will hold up in an audit, then you should prorate the expense. Prorating it based on the income ratio is certainly a reasonable way to do it.

However, certain facts and circumstances might change my view of this. For example, what if you could show that the employer did not require any of the training, and that the training was either required or essential for the development of his own business? That would certainly support putting it all on Schedule C.

That's probably not the case. But it might be worth asking a few more questions.

BMK

[taxxcpa]

If the Schedule C business is not yet in operation, and is not needed for the current job, then it appears to be training needed for a new job--just like an accountant taking a CPA coaching course to obtain a new credential.

[jsamans]

If the Schedule C business is not yet in operation, and is not needed for the current job, then it appears to be training needed for a new job--just like an accountant taking a CPA coaching course to obtain a new credential.

I disagree. Nutrition is continuing education for a licensed dietician. That the education was used by the client to move into a different job within the same area of expertise is different from it qualifying the client for a new profession.

[taxea]

startup expense???

[krav]

Thanks for the suggestions - glad to see I'm not the only one who doesn't think it is a clear cut situation. The client, of course, thinks it's very clear cut and everything should be written off on the Sch C (although much of it is start up as it was incurred for around 18 months prior to the first self employment income). I meet with him later this week and will try to get a better feel for how the training relates to the W2 job as opposed to the Sch C. Hypothetically, if he can show that it is 2 different jobs, would all the training (both prior to "business opening" and ongoing) then be deductible on the Schedule C?