dissenting: I must dissent from the opinion of the majority in all respects. I believe that the majority takes too restrictive a view of the “trade or business” of teaching, and I do not understand how the majority can disregard the forthright and obviously sincere testimony of the petitioner and find that her primary purpose was to obtain a position about which she knew nothing.
The majority seems to feel that if one is not being paid for actively conducting classes, he is not in the trade or business of teaching. I disagree. Effective teaching requires that a teacher keep abreast of new developments in how to relate the subject matter he is teaching to his students. A teacher must also constantly strive to improve his understanding of his subject matter, for, indeed, all a teacher can impart to his students is the understanding he himself has. Thus, continual self-improvement is a common and necessary part of the teaching profession. The most efficient manner of achieving this self-improvement is through further formal education, either “in-service” or in colleges and universities.
If petitioner had undertaken her graduate studies on a part-time basis in the evenings, or if she had attended Northwestern only during summers, the respondent would not question her status of being engaged in a trade or business. Eev. Eul. 60-97,1960-1 C.B. 69. I believe that a person is no less engaged in a trade or business if he undertakes full-time study for one 12-month period than if he undertakes full-time study for four or more 8-month periods spread over a number of years. In my view, the deciding factor is whether the active pursuit of a trade or business is left temporarily for the sole purpose of obtaining education with the intent to immediately return at the completion of the education. Petitioner’s graduate study was of substantial value to her trade or business of being a teacher. Therefore, her absence from active teaching was in pursuit of a valid business objective.
In effect, petitioner took a temporary leave of absence from her “trade or business” for the sole purpose of obtaining further education that would improve her skills as a teacher, and the expense of obtaining this objective is an expense incurred in carrying on a trade or business. Eev. Eul. 60-97,1960-1 G.B. 69, expressly provides that a taxpayer will not be considered to have ceased to engage in business when he is on a temporary leave of absence. But respondent argues that there must be a “formal” leave of absence. I disagree. A piece of paper or the maintenance of the taxpayer’s name on the employer’s personnel rolls does not make a taxpayer any more or any less actively engaged in a trade or business. A formal leave of absence, like the maintenance of an office or a retail store, may be some indication of the taxpayer’s intent with regard to his trade or business, but here, I am satisfied with petitioner’s intent.
Eeviewing the facts, I find that petitioner wanted to improve her skills as a teacher by undertaking further study of history. There were two methods by which she could accomplish this goal. One was by part-time evening and summer study while she continued teaching. The other method was by enrolling in a university for a full-time graduate program. Petitioner did not doubt which method would benefit her more. Both methods were reasonable paths to her goal. As was said in Hill v. Commissioner, 181 F. 2d 906, 908 (C.A. 4, 1950), reversing 13 T.C. 291 (1949), “If the particular course adopted by the taxpayer is a response that a reasonable person would normally and naturally make under the specific circumstances, that would suffice.” There is persuasive evidence that study on a full-time basis may be a better educational program than study on a part-time basis, and it would be unfortunate for the tax law to treat more favorably the person engaged in part-time study.
The respondent and the majority rely on Canter v. United States, 354 F. 2d 352 (Ct. Cl. 1965). Canter was a registered nurse employed by the U.S. Public Health Service. She took leave of absence from her job on February 1, 1958, which leave expired (and could not be renewed) on August 26,1958. She enrolled as a full-time student of nursing at the University of Maryland in February of 1958. She received a B.S. degree in June 1960. In September of 1960, she began graduate study in nursing at the University of Maryland, receiving her master’s degree in June 1962. After completing her education, she accepted a position with Montgomery County, Md. She returned to the Public Health Service in May of 1963. The court found that, in 1960, Canter was not “on temporary leave of absence either in form or in substance,” and her expenses of education in that year were not deductible.
I think that the Canter case is clearly distinguishable since it involved a much longer absence from her active nursing work. However, I do agree with a statement of Judge Davis in his dissent in that case that “the concept of a temporary leave of absence must be seen functionally and realistically, not technically or formally.”
I also disagree with the majority’s finding that petitioner undertook her study “primarily for the purpose of obtaining a new position or advancement in position or meeting the minimum qualifications for certain teaching positions.” This finding is pure conjecture.
The majority’s reasoning seems to be that while petitioner testified that she undertook her study to improve her teaching skills, it is obvious from her testimony that she also knew that a master’s degree would bring her a higher salary and help her meet the minimum requirements for “better” teaching positions. Therefore, the majority reasons that petitioner probably did not know her primary purpose in undertaking the education, and since the Court must choose a primary purpose for her, it will choose a purely economic interpretation of the facts.
I cannot understand why the majority refuses to believe petitioner’s testimony that her purpose in undertaking further study was to improve her skills as a teacher of history. This is the only purpose petitioner mentioned throughout the record of this case. Petitioner was not represented by counsel, and so she did not use the magic formula of “primary purpose,” but it is obvious from a reading of the record that to improve her skills was the purpose she had in mind. And we really have no basis for disbelieving petitioner’s testimony. The majority relies on the evidence in the record that petitioner knew that teachers with masters’ degrees generally receive higher salaries and that a master’s degree fulfilled the final certification requirements in most school systems. Of course, she knew this. Almost all teachers do. But I cannot agree that because of her knowledge of the requirements of the teaching profession, we should disbelieve her avowed purpose. I receive the impression from the majority’s finding as to primary purpose that they simply cannot believe that a teacher would be motivated by a desire to improve her teaching — according to the majority, there must be some ulterior motive, most probably an economic one.
Petitioner, after receiving her master’s degree, continued teaching the same subjects on the same level she had taught before receiving her master’s degree. But the majority holds that since she received an increase in salary and since her education met the requirements of the teaching position at the DeKalb school, the education was undertaken primarily for the purpose of obtaining such position or advancement. Section 1.162-5, Income Tax Begs., recognizes that the fact that the education undertaken meets the express requirements for a new position is only an “important” factor in determining the purpose of the education. I am convinced that petitioner did not undertake her education for the purpose of meeting the express requirements for a new position. Petitioner was concerned with improving her skills as a teacher; she was not concerned with the requirements of any one school system. It would be unrealistic to assume that petitioner, while in Crookston, Minn., decided that she wanted to teach at a specific school in. DeKalb, Ill., and accordingly decided to give up a year’s income and in addition to incur tuition costs at a private university in order to meet the requirements of that school and be eligible for a vacancy on the staff that had probably not yet occurred. Although the petitioner testified that a social science teacher is generally required to have a master’s degree, that is not to say that she could not have continued to find employment with her bachelor’s degree. Inasmuch as she terminated her employment with the Crookston school system, and it would not have been essential for her to have a master’s degree to continue teaching social sciences, I cannot and will not find that she undertook the additional education to secure a new or substantially better position,
I am satisfied that petitioner undertook full-time graduate study during the years in question to improve her skills as a teacher of history or social studies. Undoubtedly, petitioner also recognized that in many school systems she -would receive an increased salary if she had a master’s degree. Petitioner was aware that in a number of States a master’s degree is required within a certain period of time if certification in such a State is to be continued. It may very probably be said, then, that petitioner wished to undertake further study for more than one reason. Such a situation is not unusual, and it is my opinion that these other reasons do not nullify petitioner’s desire to improve her teaching skills. That a taxpayer has more than one purpose in undertaking education does not necessarily deny him the privilege of a deduction. United States v. Michaelsen, 313 F. 2d 668 (C.A. 9, 1963), affirming 203 F. Supp. 830 (E.D. Wash. 1961), and a Memorandum Opinion of this Court; Marlor v. Commissioner, 251 F. 2d 615 (C.A. 2, 1958), reversing per curiam 27 T.C. 624 (1956). I believe that since the graduate program undertaken by the petitioner substantially aided her in her trade or business as a teacher, the expenses of such a program should be deductible even though she derived some other 'benefit from the additional education.
Finally, I view this case as analogous in some respects to Ramon M. Greenberg, 45 T.C. 480 (1966), revd. 367 F. 2d 663 (C.A. 1, 1966).
Dawson, J., agrees with this dissent.