Brief Fact Summary. Petitioner worked at a law firm and specialized in tax matters. He attend a course in tax matters sponsored by New York University. He spent $305 in expenses attending the course and sought to deduct this as a business expense.
Synopsis of Rule of Law. Necessary expenses incurred in carrying on a trade or business are deductible if they are directly connected with or proximately resulted from the practice of a profession.
Facts. Petitioner was a member of a law firm and he specialized in tax matters. He attended the Fifth Annual Institute on Federal Taxation. He incurred expenses for tuition, travel and lodging of $305 and claimed that amount as a deduction of ordinary and necessary expenses incurred in carrying on a trade or business. The Commissioner did not allow the deduction and the Tax Court affirmed.
Issue. Should the expenses be allowed to be deducted as an ordinary and necessary business expenses?
Held. Circuit Judge Chase issued the opinion for the United States Second Court of Appeals in reversing the Tax Court and holding that the expenses should be allowed to be deducted.
Discussion. The Court of Appeals found that this expense had characteristics of being a personal one that should not be decisive. In this case, Petitioner was expending fund to keep educated and up to date in an area that he was charged with knowing by his law firm. He had a “professional need” to incur the expense.