Toner v. Commissioner

Fay, J.,

dissenting: I respectfully dissent.

In disallowing the disputed deduction, the majority rests its conclusion on section 1.162-5(b)(2)(i), Income Tax Regs., which denies a deduction for expenditures made by an individual for education which is required in order to meet the minimum educational requirements “for qualification in [her] employment or other trade or business.” In so doing, the majority interprets, and in my opinion significantly alters, the descriptive phrase “for qualification in [her] employment or other trade or business” to mean “for qualification in [her] employment or [another] trade or business.” To me the language of the regulation, as written, refers to an individual’s employment, or, in the case of a self-employed individual, to an individual’s trade or business.

In addition to its misreading of section 1.162 — 5(b)(2)(i), Income Tax Regs., the majority inexplicably fails to discuss subsection (ii) of that same regulation which deals specifically with teachers. This regulation provides that the minimum educational requirements for qualification in a position in an educational institution are those required by the applicable State laws. However where, as in the instant case, the State imposes no educational requirements for teachers, the regulation further states:

If there are no normal requirements as to the minimum level of education required for a position in an educational institution, then an individual in such a position shall be considered to have met the minimum educational requirements for qualification in that position when he becomes a member of the faculty of the educational institution. * * *

In view of this, I would hold that when petitioner first became a member of the faculty of the school where she taught, she satisfied the minimum educational requirements within the meaning of respondent’s regulations.

Although not relied upon by respondent, Judges Sterrett, Chabot, and Drennen would disallow the deduction on the basis of section 1.162-5(b)(3), Income Tax Regs., which precludes a deduction for “education which is part of a program of study being pursued” by a taxpayer “which will lead to qualifying [her] in a new trade or business.” They reason that petitioner’s qualification for certification as a teacher by the State allowed her to teach in public schools, Catholic high schools, and in private nonreligious schools, and thus, qualified her for a new trade or business. In my opinion, this conclusion totally ignores the language and thrust of section 1.162-5(b)(3)(i), Income Tax Regs., which, in part, states:

In the case of an employee, a change of duties does not constitute a new trade or business if the new duties involve the same general type of work as is involved in the individual’s present employment. For this purpose, all teaching and related duties shall be considered to involve the same general type of work. * * * [Emphasis added.]

Judge Sterrett analogizes the instant situation to those cases which have held that a practicing noncertified accountant and a certified public accountant are in separate trades or businesses. See Glenn v. Commissioner, 62 T.C. 270 (1974). However, a close reading of those cases indicates that the underpinning for the decisions was not the mere issuance of a certificate; rather, it was the various and different duties performable by each type of accountant.

In our case, respondent’s regulations could not be more clear in stating that all teaching duties involve the same general type of work. In this regard, I agree with Judge Goffe’s observation that a “teacher is a teacher is a teacher is a teacher.” Simply put, to me the most that can be said of petitioner’s education is that it resulted in a difference in “degree” but not in kind.

I would allow the disputed deduction.

Featherston, Irwin, Quealy, Goffe, Hall, and Wiles, JJ., agree with this dissenting opinion.