Respondent determined deficiencies in petitioner’s income tax for the years 1964 and 1965 in the respective amounts of $339.69 and $994.43.
For the year 1964, petitioner has conceded in his reply brief that Re is not entitled to deductions for automobile expense of $40 and for tuition, books, and supplies of $535.61. Thus there remains in dispute a claimed business deduction of $1,030.50 for meals and lodging incurred while petitioner was attending the University of Denver Law School.
Petitioner did not allege error in his petition with respect to a claimed deduction of $4,278.87 for legal education expenses incurred in 1965 which were disallowed by respondent in the notice of deficiency. Therefore, the deficiency determined for 1965 is not contested.
The only issue for decision is whether the 1964 expenses of $1,030.50 incurred for meals and lodging in attending law school as a full-time student are deductible as ordinary and necessary business expenses.
FINDINGS OF FACT
Some of the facts have been stipulated and are found accordingly.
IST. Kent Baker (herein called petitioner) was a legal resident of Colorado Springs, Colo., when he filed his petition in this proceeding.
Petitioner’s individual Federal income tax return for the year 1964 ivas filed with the district director of internal revenue at Denver, Colo. He claimed a standard deduction on his return and also claimed as a separate deduction the following expenses paid in attending the University of Denver Law School in 1964:
Meals and lodging-$1,030. 50
Automobile expenses- 40. 00
Tuition, books, and supplies_ 535. 61
Total_ 1,606.11
B. H. Baker, Inc., is a corporation located in Colorado Springs, Colo., which is engaged in commercial, industrial, and engineering construction. Most of its operations are conducted in the southern half of Colorado. In 1964 the corporation was owned entirely by B. H. Baker, the father of petitioner.
Petitioner, who was bom February 1,1940, began working part time for his father’s corporation in 1954 while he was in high school. He performed semiskilled work, i.e., hod carrier, carpenter’s helper, mason tender, and some surveying. He graduated from Colorado Springs High School in 1958, and enrolled later that year in Ottawa University, Ottawa, Kans. He transferred to Colorado State University, Fort Collins, Colo., in 1960. He completed his requirements for a B.S. degree in civil engineering in December 1963 and received his degree in 1964. Immediately after leaving Colorado State University, he entered Stanford University in Palo Alto, Calif., to obtain a masters degree in civil engineering. He dropped out of the graduate engineering program at Stanford sometime around the end of February 1964. During the time he attended Ottawa University, Colorado State University, and Stanford University he lived at the respective schools. He returned to his father’s home in Colorado Springs during vacation periods and in the summers. When he was home from college he worked for B. H. Baker, Inc.
Beginning in March 1964, petitioner was employed full time as an engineer by B. H. Baker, Inc. To be employed by the corporation it was required that the person have a civil engineering degree and preferably some experience in construction work. His duties as an engineer included estimating, procurement of services and materials, project safety inspection, labor relations, project scheduling, and coordination, drafting contracts and purchase orders, administration, expediting, and general construction engineering. He performed his duties adequately.
Petitioner thought a 'legal education would aid him in his future work with the construction company. Therefore, in the summer of 1964, with his father’s encouragement and consent, petitioner applied for admission to the University of Denver Law School. In doing so, he advised the interviewer for the law school that his interest in the legal profession arose out of his work in the construction business and his engineering studies. He entered the University of Denver Law School in September 1964 as a full-time student. He left his father’s home in Colorado Springs and rented an apartment for about $145 per month at the Fiesta Apartments in Denver. He lived in the apartment during the week since he attended law classes from Monday through Friday. On most weekends and during vacation periods he returned to Colorado Springs to do work for the construction company. He also did some work in connection with a job the company was handling in Denver. Fie was retained on the corporation payroll as a full-time employee while attending law school. In 1964 he received wages of $7,275 and in 1965 approximately $5,242.
Except for the summer of 1965, petitioner attended the University of Denver Law School continuously until he graduated on March 17, 1967, with a juris doctor degree. He was admitted to the Colorado bar in April 1967. All along, he intended to return to and work for the corporation full time when he completed law school. While attending law school, he endeavored to take as many law courses as possible which related in some way to the construction business. He expected that his legal education would better equip him to perform his future work with the company. He has not engaged in the practice of law and has never represented the corporation as an attorney. However, because of his legal education he has been able to confer better with outside counsel.
After graduation from law school, petitioner returned to work full time for the corporation and was immediately elected its vice president with a substantial salary increase. Many of his duties remained the same, but he also did some legal work, viz, drafting a new subcontract agreement and a new purchase-order agreement,’ serving in an advisory capacity to outside counsel; and representing the company in contract negotiations.
B. H. Baker, Inc., did not require any of its engineers or employees to attend law school or any other school on a regular basis. Some employees attend night courses which do not interfere with their regular work. Except for petitioner, the employees of the company who attend school on a regular basis are not paid a full salary.
In his notice of deficiency respondent disallowed the claimed deduction of $1,606.11 for legal education expenses.
ULTIMATE BINDINGS
The expenditures of $1,080.50 for meals and lodging made by petitioner in 1964 while attending law school were undertaken primarily for personal purposes. They were not made primarily to improve or maintain skills required by petitioner in his employment or other trade or business.
OPINION
Petitioner’s expenses for meals and lodging while attending law school in Denver are deductible under section 162(a), I.R.C. 1954, if they constitute ordinary and necessary business expenses. Petitioner has elected to rely on section 1.162-5, Income Tax Regs., adopted in T.D. 6291,1958-1 C.B. 63, and in effect prior to amendment by T.D. 6918, 1967-1 C.B. 36. See Rev. Rui. 68-191, 1968-1 C.B. 67. Section 1.162-5 then provided, in pertinent part, as follows:
(a) Expenditures made by a taxpayer for bis education are deductible if they are for education (including research activities) undertaken primarily for the purpose of:
(1) Maintaining or improving skills required by the taxpayer in his employment or other trade or business, or
(2) Meeting the express requirements of a taxpayer’s employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the taxpayer of his salary, status or employment.
Whether or not education is of the type referred to in subparagraph (1) of this paragraph shall be determined upon the basis of all the facts of each case. 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 purpose described in subparagraph (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 the purpose of fulfilling the general educational aspirations or other personal purposes of the taxpayer. The fact that the education undertaken meets express requirements for the new position or substantial advancement in position will be an important factor indicating that the education is undertaken primarily for the purpose of obtaining such position or advancement, unless such education is required as a condition to the retention by the taxpayer of bis present employment. In any event, if education is required of the taxpayer in order to meet the minimum requirements for qualification or establishment in bis intended trade or business or specialty therein, the expense of such education is personal in nature and therefore is not deductible.
Petitioner contends that the facts herein show that his expenditures in 1964 for a legal education were undertaken primarily for the purpose of maintaining or improving his skills required by his employment in the construction business. Respondent, on the other hand, contends that petitioner’s legal education was undertaken for personal reasons. He argues, alternatively, that it was done primarily to fulfill petitioner’s “general educational-aspirations” or to obtain a “substantial advancement in position.”
Whether expenditures are for education undertaken primarily for the purpose of “maintaining or improving skills” required by the taxpayer in his employment must be determined from all the facts and circumstances involved. Sec. 1.162-5(a), Income Tax Regs.; see also Welsh v. United States, 329 F. 2d 145 (C.A. 6, 1964); and Condit v. Commissioner, 329 F. 2d 153 (C.A. 6, 1964), affirming a Memorandum Opinion of this Court. Because the question is essentially factual, previously decided cases are of little precedential value. Suffice it to say that, after reading and considering the cases cited by petitioner, we find each one sufficiently distinguishable on its facts so that none controls the instant case.
We think this record does not support a finding that the petitioner incurred legal education expenses for the primary purpose of maintaining or improving skills required by him in his employment as an engineer with the construction company.1 In our view it is much more reasonable to infer from this record that the petitioner undertook his legal education primarily for personal reasons.
First, for all practical purposes, there was an uninterrupted continuity of petitioner’s education from the time he entered college in 1958 until he graduated from law school in March 1967. It is true that for the 6 months from March to September 1964 the petitioner worked full time as an engineer for his father’s construction company and lived in his home in Colorado Springs. But petitioner took steps to enter the University of Denver Law School at apparently the earliest possible date, i.e., September 1964. Since there was no appreciable break in bis formal education, we believe the totality of the facts reveals a continuing pattern of a person who was simply fulfilling his “general educational aspirations or other personal purposes.” Sec. 1.162-5 (b), Income Tax Eegs. And no doubt petitioner’s father would have continued to “employ” him and carry him on the company payroll regardless of what the petitioner did or where he wanted to go to law school. Therefore, the expense of such education was of the very type mentioned in the regulations as constituting an expenditure personal in nature and nondeductible under section 262.
Second, it is obvious that the services performed by petitioner for B. H. Baker, Inc., were done on a part-time, almost token, basis because during the period from September 1964 until March 17,1967, he was attending law school full time, 5 days a week, and was living in Denver, some 65 miles from Colorado Springs. Yet when he returned to the company in March 1967 with his law degree he was given a “substantial advancement in position,” i.e., vice president of the company with a sizable increase in salary. See sec. 1.162-5 (b), Income Tax Regs.; Sandt v. Commissioner, 303 F. 2d 111 (C.A. 3, 1962), affirming a Memorandum Opinion of this Court; Condit v. Commissioner, supra; and Joseph T. Booth III, 35 T.C. 1144 (1961).
Accordingly, we hold there is no basis for sustaining petitioner’s claim that his legal education expenditures are deductible as ordinary and necessary business expenses incurred in carrying on his trade or business. They were nondeductible personal expenses.
Reviewed by the Court.
Decision will be entered for the resfondenb.
The testimony of petitioner and his father, B. H. Baker, has been carefully read and considered. We do not question the credibility of their testimony. We simply do not find it persuasive or convincing when viewed through the illuminating skylight of all the surrounding circumstances, their actions and other undisputed, objective facts. We have looked beyond petitioner’s declaration of subjective intent in determining primary purpose.