T.C. Summary Opinion 2001-35
UNITED STATES TAX COURT
EDWARD M. FIELDS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17174-98S. Filed March 20, 2001.
James Charles Frooman, for petitioner.
Gary R. Shuler, Jr., for respondent.
CARLUZZO, Special Trial Judge: This case was heard pursuant
to the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code in effect for 1995. Rule references are to the Tax
Court Rules of Practice and Procedure. The decision to be
entered is not reviewable by any other court, and this opinion
should not be cited as authority.
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Respondent determined a deficiency of $2,593 in petitioner’s
1995 Federal income tax. The issue for decision is whether
petitioner is entitled to deduct, as trade or business expenses,
tuition costs and related expenses incurred in attending the Golf
Academy of the South.
Background
This case was submitted fully stipulated, and the stipulated
facts are so found. Petitioner resided in Mason, Ohio, at the
time the petition was filed.
During 1995, petitioner was employed in a variety of ways.
According to the stipulation of facts, he “worked full time in
construction and was self-employed as a golf instructor and
worked at golf courses in the pro shops.”
Beginning in 1994, petitioner enrolled as a student at the
Golf Academy of the South (the academy). The academy is
accredited as a business school by the Accrediting Council for
Independent Colleges and Schools, Washington, D.C.; it is
licensed by the State Board of Independent Postsecondary,
Vocational, Technical, Trade and Business Schools, Florida
Department of Education. Successful graduates of its 2-year
program are awarded a specialized associate degree in business.
Courses offered by the academy are approved for the training of
veterans and persons eligible for VA educational benefits.
Subject to certain conditions and limitations, the academy
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accepts educational credits earned at other accredited
educational institutions. Credits earned at the academy are
transferable; according to its catalog, “Academy graduates can
expect to earn a bachelor’s degree in two academic years” at
another educational institution.
While at the academy, petitioner took the following courses:
Semester Courses
1 Introduction to Business
Microcomputer Applications
Attitude and Motivation Assessment
Business Writing
Golf Fundamentals
Short Game and Putting Techniques
2 Elementary Accounting
Automated Pro Shop Management
Golf Shop Management
Golf Club Design and Repair
Health Science
Small Business Management
Club Fitting and Merchandising
3 Financial Management
Verbal Communication Skills
Turf Management
Methods of Teaching
Advanced Rules of Golf
Planning and Org. of Tournament Golf
Anatomy, Exercise, and Biomechanics
4 General Business Law
Advanced Microcomputer Applications
Sports Psychology
Food and Beverage Purchasing Control
Country Club Management
Golf Course Design and Irrigation
Teaching Laboratory
Clinic Planning
Advanced Golf Techniques
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In April 1995, petitioner was awarded a specialized associate
degree in business from the academy. At the time, he held no
other undergraduate degrees.
During 1995, petitioner paid tuition costs and related
expenses of $9,986.43 incurred in connection with his enrollment
at the academy (the education expenses). On a Schedule C, Profit
or (Loss) From Business, included with his timely filed 1995
Federal income tax return, petitioner: (1) Listed his principal
business or profession as “golf instructor”; (2) reported gross
income of $2,010; (3) deducted total expenses (including the
education expenses) of $16,297.52; and (4) reported a net loss of
$14,287.52.
In the notice of deficiency, respondent disallowed the
education expenses deducted on the Schedule C, because petitioner
failed to establish that the expenses were “ordinary and
necessary”. Other adjustments made in the notice of deficiency
are not in dispute.
Discussion
On the Schedule C included with his 1995 return, petitioner
deducted the education expenses as trade or business expenses
paid in connection with his employment as a golf instructor. In
general, section 162(a) allows a deduction for all ordinary and
necessary expenses incurred in carrying on a trade or business.
Expenditures made by an individual for education that maintains
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or improves the skills required by the individual in the
individual’s trade or business are deductible as ordinary and
necessary business expenses. See sec. 1.162-5(a), Income Tax
Regs. No deduction is allowed, however, if the education is part
of a program of study that will lead to qualifying the individual
in a new trade or business. See sec. 1.162-5(b)(3), Income Tax
Regs. Expenditures made for education that is a part of a
program of study that will lead to qualifying an individual for a
new trade or business are not deductible, even if the education
maintains or improves the skills required by the individual in
the individual’s trade or business, because those expenditures
“are personal expenditures or constitute an inseparable aggregate
of personal and capital expenditures”. Sec. 1.162-5(b)(1); see
also sec. 262.
Petitioner points to the stipulation that during 1995 he was
self-employed as a golf instructor. According to petitioner,
the course of study he pursued at the academy did not lead to
qualifying him in a new trade or business, but it did maintain or
improve the skills required of him as a golf instructor. The
manner in which petitioner’s skills as a golf instructor were
maintained or improved is not specifically addressed. We are
invited to conclude that they were, if only from inferences drawn
from our general knowledge regarding what a “golf instructor”
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does and the nature of the courses offered by the academy, as
described in its catalog.
Respondent, although not necessarily agreeing that the
education maintained or improved petitioner’s skills as a golf
instructor, argues instead that the education expenses are not
deductible because the education leads to qualifying petitioner
in a new trade or business. Relying heavily on information
contained in the academy’s catalog, we agree with respondent.
As a successful graduate of the academy, petitioner was
awarded a specialized associate degree in business from an
educational institution accredited by the Accrediting Council for
Independent Colleges and Schools, Washington, D.C., and licensed
by the State Board of Independent Postsecondary, Vocational,
Technical, Trade and Business Schools, Florida Department of
Education. Some of the courses that petitioner took while
attending the academy no doubt maintained or improved his skills
as a golf instructor, but other courses were directed more to a
general business education. “If the education qualifies the
taxpayer to perform significantly different tasks and activities
than could be performed prior to the education, the education
qualifies the taxpayer for a new trade or business.” Kersey v.
Commissioner, T.C. Memo. 1993-641 (citing Glenn v. Commissioner,
62 T.C. 270 (1974)), affd. without published opinion 50 F.3d 15
(9th Cir. 1995). As the type of degree awarded to petitioner
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suggests, petitioner’s education at the academy, which included
numerous business courses, qualifies him for trades or businesses
other than that of golf instructor.
We also find it significant that upon being awarded an
associate’s degree from the academy, petitioner could, as the
catalog states, “expect to earn a bachelor’s degree in two
academic years” at another institution. Simply put, the
educational expenses here in dispute were incurred in the course
of obtaining a basic undergraduate degree, even if many of the
courses directly related to petitioner’s trade or business at the
time. We think it is axiomatic that in the case of an individual
who holds no prior undergraduate degrees, a college education
leads to qualifying that individual for a variety of new trades
or businesses. Cf. Carroll v. Commissioner, 51 T.C. 213 (1968),
affd. 418 F.2d 91 (7th Cir. 1969).
In this case, we find that the education expenses were
incurred in the course of study that would lead to qualifying
petitioner, who held no prior undergraduate degrees, in trades or
businesses other than as a golf instructor. It follows that the
education expenses are not deductible, and we so hold.
Respondent’s adjustment in this regard is therefore sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
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On the basis of the foregoing and to reflect the agreement
of the parties on other adjustments,
Decision will be
entered under Rule 155.