Carroll v. Commissioner

Simpson, Judge:

Respondent determined a deficiency in petitioners’ 1964 income tax in the amount of $207.17. The issue for decision in this case is whether the petitioner, James A. Carroll, is entitled to deduct certain educational expenses.

FINDINGS OP PACT

Some of the facts have been stipulated, and those facts are so¡ found.

Petitioners, James A. and Isabelle Carroll, are husband and wife, ■who resided in Chicago, Ill., at the time the petition was filed in this case. They filed their 1964 joint Federal income tax return, using the cash receipts and disbursements method of accounting, with the district director of internal revenue in Chicago. Mr. Carroll will be referred to as the petitioner.

In their 1964 return, it is reported Mr. Carroll is a policeman and his wife is a secretary. One of the itemized deductions on the return is the petitioner’s educational expense of $720.89, which is explained on an attachment to the return as:

education expense
Expense relative to improving job skills to maintain my position as a detective which is not a civil service rank and subject to monthly review to ascertain if performance is up to standards set forth by the Superintendent of police before a U.S. Senate Commitee [sic] relative to police ability to cope with Organized Crime.

The petitioner commenced employment with the Chicago Police Department in 1957, and during the year 1964, he was employed as a detective. The petitioner left the Chicago Police Department during the year 1966.

In December 1962, the petitioner applied for admission to De Paul University, stating in his application that he wished to prepare for the profession of law. In 1963, he became an enrolled student in the major field of philosophy, and the courses he took were in accord with the prerequisites set forth by the university for entrance to law school. In September 1966, the petitioner entered De Paul University College of Law.

During tlie year 1964, the petitioner paid De Paul University $720.89. During that year, he was enrolled in the courses set forth below:

Department dowse
English- Introduction to the Plays of Shakespeare.
History_ Making of Modern America Since 1865.
Philosophy_ Philosophy of Science.
English_ English Literature, 1660-1800.
Philosophy _ History of Modern Philosophy.
Political Science_ American Government.

The Chicago Police Department did not have in effect during the year 1964 an order requiring policemen to attend college as a condition to the retention of the employee’s salary, status, or employment. However, the department did have in effect an order that encouraged policemen to attend colleges and universities, which provided in pertinent part:

5 July 1963
DEPARTMENT GENERAL ORDER NO. 63-21
Subject: Extra-departmental education
I Purpose
To encourage members of the department to further their extra-departmental education.
II Definition
Extra-departmental education, for the purpose of this order, is defined as enrollment in a recognized academic institution which will increase the member’s value to the Department.
III Exemption Policy
A. Unit commanders will exempt members of their command who enroll in junior college, college or university courses from the normal shift rotation schedule in such a manner as not to interfere with either effective police operations or class attendance. A permanent watch assignment will be made when possible; otherwise the member will rotate between watches which do not conflict with the class schedule.
*******
IV Request Procedure
A. Members may request the exemption described in paragraph III, A., by submitting a request to their commanding officer containing the following specific information:
1. Name, employee number, star number and assignment.
2. Name of school in which the member is enrolled or from which he has received formal notification of acceptance.
3. A copy of the class schedule showing all pertinent dates, times, course names and number of credits to be earned.
4. Number of credits already completed and the degree or certificate sought.
B. A request will be denied when it is based on a course of study that will not increase the member’s value to the department.
Distribution: AJI personnel
I Rave read and understand the above order.
Signature: (s) Jambs A. Cabboll Date: 16 July 63

At tlie time the petitioner enrolled in De Paul University, he submitted the proper written request and reports to his commanding officer, and he received the benefit of the exemption policy during all of 1964 while he was attending the university.

OPINION

The issue presented is whether the petitioner’s educational expenses may be deducted as a business expense under section 162(a) of the Internal Revenue Code of 19541 or whether the education was personal so that a deduction for the expenses is deified by section 262.

There are many expenses which are helpful, even essential, to one’s business activities, but which are not deductible in our tax system. Commuting to one’s place of employment is certainly helpful to the performance of one’s work, but the commuting costs are not deductible. John C. Bruton, 9 T.C. 882 (1947). One’s clothes are also essential if he is to work in society, but their cost is not deductible, unless the clothing is not suitable for personal use. Betsy Lusk Yeomans, 30 T.C. 757 (1958). The charges of a babysitter who is employed so that the mother may work outside the home are not deductible as a business expense. Mildred A. O'Connor, 6 T.C. 323 (1946). In rejecting the argument that all expenses essential to one’s employment are deductible, this Court has said:

This -thought evokes an array of interesting possibilities. The fee to the doctor, but for whose healing service the earner of the family income could not leave his sickbed;1 the cost of the laborer’s raiment, for how can the world proceed about its business unclothed; the very home which gives us shelter and rest and the food which provides energy, might all by an extension of the same proposition be construed as necessary to the operation of business and to the creation of income. Yet these are the very essence of those “personal” expenses the deductibility of which is expressly denied. * * * [Footnote omitted. Henry C. Smith, 40 B.T.A. 1038 (1939), affirmed per curiam 113 F. 2d 114 (C.A. 2, 1940).]

Hence, the fact that the petitioner’s education is helpful to him in the performance of his employment does not establish that its cost is deductible as a 'business expense.

This Court has considered whether the cost of an elementary education is deductible and held that it is not. Ronald D. Kroll, 49 T.C. 557 (1968). In that case, a child actor attended a private school because its educational program was more adaptable to his working schedule. It was argued that the cost of attending the private school was a deductible expense because it would not have been incurred but for his acting career. However, it was held that such expense was not deductible because he secured a general education, the cost of which is personal and not a deductible business expense.

A general college education, such as that undertaken by the petitioner, may not be as clearly a personal expense as an elementary education, but it seems to us that both are essentially the same type of expense. Millions of people must secure a general college education before they commence their life’s employment, and it is generally accepted that obtaining such education is a personal responsibility in preparing for one’s career. Should the result be any different for the man who goes to college after commencing work? Though his perseverance is to be admired, we do not believe that he should receive tax deductions not available to those who complete their general college preparation before beginning their career. Furthermore, a general college education has more than economic utility. It broadens one’s understanding and increases his appreciation of his social and cultural environment.

¡Education is a companion which no misfortune can depress, no crime can destroy, no enemy can alienate, no despotism can enslave. At home a friend, abroad an introduction, in solitude a solace, and in society an ornament. It chastens vice, it guides virtue, it gives, at once, grace and government to genius. Without it, what is man? A splendid slave, a reasoning savage. [Joseph Addison, The Spectator, (Nov. 6, 1711).]

For these reasons, we conclude that section 262 applies to the petitioner’s expenses of obtaining a general college education. Although such an education may have been helpful in his employment, securing it was a personal responsibility, and it provided extensive personal rewards.

In addition, we believe that when the petitioner’s educational expenses are examined in the light of section 162 and the regulations thereunder, they do not qualify for deduction under that section. The regulations in effect in 1964 were issued in 1958. Such regulations provide in part:

Sec. 1.162-5 Expenses for education. — (a) Expenditures made by a taxpayer for his education are deductible if they are for education * * * undertaken primarily for the purpose of:
(1) Maintaining or improving skills required by the taxpayer in his employment * * *
*«•*#***
If it is customary for other established members of the taxpayer’s trade or business to undertake such education, the taxpayer will ordinarily be considered to have undertaken this education for the purposes described in sub-paragraph (1) of this paragraph. * * *
(b) Expenditures made by a taxpayer for his education are not deductible if they are for education undertaken primarily for the purpose of obtaining a new position or substantial advancement in position, or primarily for tbe purpose of fulfilling the general educational aspirations or other personal purposes of the taxpayer.[2]

The petitioner has the burden of proving that the education was undertaken with the primary purpose of maintaining or improving job skills. Eule 32, Tax Court Eules of Practice. Whether it was undertaken for such purpose is a factual question. Cosimo A. Carlucci, 37 T.C. 695, 700 (1962). We do not believe that the petitioner has satisfied his burden.

The petitioner contends that his education was undertaken for the primary purpose of maintaining or improving his skills as a policeman. In support of his contention, he relies upon Department General Order No. 63-24 and the testimony of other policemen.

The petitioner relies upon the department order to establish that his education did increase his value to the police department. He points out that the purpose of the order is to encourage members of the police force to secure additional education; that to receive the benefits of the order, the education must increase the policeman’s value to the department; that he complied with the provisions of the order and that in accordance with the order, his assignments were arranged so that he could attend classes. He reasons that since his superiors granted him the benefits of the order, they must have found that his education did increase his value to the department. As further support for this reasoning, the petitioner’s witnesses testified that in the past, the police department paid the costs of members who wished to attend college and that education was beneficial to a policeman in the conduct of his duties.

On the other hand, there is evidence contradicting the petitioner’s stated purpose. In his application for admission to De Paul University in December 1962, he stated that he was preparing for the profession of law. Thereafter, he acted consistently with that declaration of purpose. His courses fulfilled the prerequisites for entry into law school. In 1966, the petitioner left his position with the Chicago Police Department and entered De Paul University College of Law. Thus, both prior and subsequent to 1964, the petitioner acted in a manner inconsistent with his position that the primary purpose of his educational expenses was to maintain or improve job skills. We recognize that a person may change his mind from time to time, but these inconsistent statements and facts cast doubt upon his contention in this case.

In addition, we find that the evidence offered by the petitioner fails to establish that his primary purpose was to maintain or improve his skills as a policeman. Since the testimony as to the number of policemen who attended college related to the period before 1964, it falls short of establishing that in 1964 there was a custom for policemen to attend college. The evidence also fails to establish that a general college education was considered by the police department as being of sufficient benefit to members so that it would bear the costs, since the testimony does not disclose what policemen attended school at City expense and what was the relationship between their education and their work. That some policemen may have taken courses directly and substantially related to their work, and the City may have paid the costs of such courses, does not help the petitioner in this case.

A further bar to the petitioner’s deduction of his educational expenses lies in the requirement that before expenses will be considered ordinary and necessary under section 162, it must be established that they bear a proximate and direct relationship to the taxpayer’s trade or business. Kornhauser v. United States, 276 U.S. 145, 153 (1928); Robert Lee Henry, 36 T.C. 879, 884 (1961) ; Rev. Rul. 61-133, 1961-2 C.B. 35, 36. Neither the petitioner’s major field of philosophy nor the specific courses taken by him in 1964 indicates the sort of proximate relationship required for deduction. The regulations allow a deduction for education that maintains or improves skills, but what we have in this case is an education designed to increase the petitioner’s general understanding and competency. Clearly, there is only a remote relationship between the study of Shakespeare’s plays and the petitioner’s work as a policeman. If we look at his ultimate goal, rather tb a.n at particular courses, there is still lacking the direct and substantial relationship to his skills that justifies a business deduction.3 What he will secure as a result of his general college education will be of great value to him, socially, aesthetically, and otherwise. No doubt, it will help him be a better policeman. However, we think that for a business deduction to be allowed, there must be a showing of a more direct and substantial relationship to his skills in his employment. Although in Cosimo A. Carlucci, supra, we allowed a deduction for educational expenses that were “appropriate and helpful” in the taxpayer’s employment, the relationship between education and employment was much closer in that case — an industrial psychologist taking additional courses in psychology. That case does not allow a deduction for education which is as tenuously related to job skills as was the petitioner’s.

■In 1967, the respondent revised section 1.162-5. The new regulations are effective for taxable years beginning on or after January 1, 1968, but for prior years, taxpayer may rely on either the 1958 or 1967 regulations. Rev. Rul. 68-191, I.R.B. 1968-17, 5. The petitioner has not indicated whether he relies on the 1967 regulations. However, since he lacked legal counsel, we have considered whether he is entitled to deduct his educational expenses under the 1967 regulations.

The 1967 regulations provide that expenses for education are generally deductible when such education maintains or improves skills required in employment. Sec. 1.162-5 (a) (1). By their terms, they do not require the taxpayer to establish his primary purpose in undertaking the education. However, in our opinion, the new regulations do not allow a deduction for educational expenses when the education is inherently personal and not proximate to the job activities of the taxpayer. Having previously discussed these issues and found that the education undertaken by the petitioner was of an inherently personal nature and only tenuously related to his employment, we find that the 1967 regulations do not allow the deduction claimed by the petitioner.

For these reasons, we hold that the petitioner’s educational expenses are not deductible because they are personal within the meaning of section 262 and do not meet the ordinary and necessary test of section 162. The interpretation of these provisions of the law should not be influenced by the desire of all of us to have the police better trained and better prepared to cope with the variety of problems confronting them. That objective should not influence the interpretation of a provision of the tax law. How such objective can best be accomplished should be decided by others, who can better tailor the means to the end. Accordingly,

Decision will be entered for the respondent.

Reviewed by the Court.

A11 statutory references are to the Internal Revenue Code of U954.

2 Tie Chicago Police Department did not hajve in effect during the year 1964 an order requiring policemen to attend college as a condition to the retention of salary, status, or employment. Thus, no issue is raised under see. 1.162-5 (a) (2), relating to education undertaken to satisfy such requirements.

Same courses may have a closer relationship than others to the petitioner’s work. However, no issue has been raised claiming a deduction for only some of the courses, and the petitioner has furnished us no evidence establishing a closer relationship between his work and any of them.