Brief Fact Summary. Taxpayer was a teacher of twenty-seven years in Virginia. Her teaching certificate was set to expire unless she took college credit or an examination over a set of books. She chose to take college credits and deducted the expenses as business expenses.
Synopsis of Rule of Law. Ordinary and necessary expenses paid or incurred in carrying on a trade or business during a tax year are deductible.
Thus, to be deductible as a business expense Section 162(a) the item must be-(a) paid or incurred within the taxable year; (b) incurred in carrying on a trade or business'; and (c) both ordinary and necessary.View Full Point of Law
Issue. Were the expenses ordinary and necessary in carrying on her trade or business?
Held. Circuit Judge Dobie issued the opinion for the United States Fourth Circuit Court of Appeals reversing the Tax Court and holding that the expenses are deductible.
Discussion. The Court of Appeals found that Taxpayer had complied with the letter and the spirit of the law. She did not incur the expenses for personal reasons but to enable her to have her certificate renewed to continue teaching.