*99 Deductions. -
Memorandum Findings of Fact and Opinion
TIETJENS, Judge: The Commissioner determined a deficiency in income tax of $623.70 for the taxable year 1950.
Several adjustments*100 made by the Commissioner are uncontested. The only question for decision is the deductibility of $1,874.64 expended by Raymond L. Collier in seeking new employment.
Findings of Fact
The stipulated facts are so found and the stipulation included herein by reference.
Petitioners, Raymond L. Collier (hereafter referred to as petitioner) and Elsie A. Collier, residents of Lakewood, Ohio, filed a joint income tax return for 1950 with the collector of internal revenue for the eighteenth district of Ohio.
In 1950, petitioner, who was a trade association executive drawing a salary of $20,000 per year, lost his position because of illness.
Petitioner thereafter sought comparable employment through employment agencies in Cleveland. He also expended in 1950 the sum of $1,874.64 in seeking new employment which was itemized on the 1950 joint return as follows:
Printed brochure, equipment, travel, | |
postage, etc. | $1,574.64 |
Stenographic services | 300.00 |
$1,874.64 |
Petitioner was unemployed at the time the expenditures in search of employment were made.
Opinion
Petitioner contends the expenditures made in his search for employment are (1) either deductible as ordinary*101 and necessary expenses of carrying on a trade or business within the meaning of
In our opinion petitioner must fail in both his contentions.
It is clear that the expenditures were made in seeking new employment. They were made at a time when he was unemployed. There is no factual basis in the record to support a conclusion that the amount in question was an ordinary or necessary trade or business expense. Petitioner was carrying on no trade or business when the expenditures were made. He was seeking new employment. In this respect the case is governed by the principle of
"The word 'pursuit' in the statutory phrase 'in pursuit of a trade or business' is not used in the sense of 'searching for' or 'following after,' but in the sense of 'in connection with' or 'in the course of' a trade or business. It presupposes an existing business with which*102 petitioner is connected. * * *"
Also see Frank B. Polachek, 22 T.C. - (July 9, 1954), where it was said that amounts spent during the formative period of a business which did not materialize were not deductible in a year when the taxpayer had no trade or business.
On the basis of the Frank and Polachek cases we conclude petitioner is not entitled to deduct the claimed expenditures under
Neither can his claim be sustained under
"Neither are the travel and legal expenses incurred by the petitioners in their attempt to find and purchase a business deductible under
*103 Petitioner did not incur the expenses in question to protect or further any existing employment. He was looking for a new interest - a new job.
In a way this case is analogous to
"He could, that is, deduct all expenses that related to the discharge of his functions as a judge. But his campaign contributions were not expenses incurred in being a judge but in trying to be a judge for the next ten years. * * *"
We also refer to section 29.23(a)-15 of Regulations 111 which provides that expenses in seeking employment or in placing oneself in a position to begin rendering personal services for compensation are not allowable as a deduction under
We hold the claimed expenditures are not deductible.
Decision will be entered under Rule 50.