Question

For each of the following independent situations, determine whether any of the expenditures qualify as deductible education expenses in connection with a trade or business (Reg. Sec. 1.162-5). Are the expenditures classified as for AGI or from AGI deductions?__________________________________________________________________________________________________a. Law school tuition and books for an IRS agent who is pursuing a law degree: $2,000_____________________________________________________________________________________________b. Continuing professional accounting education expenses of $1,900 for a self-employed CPA: travel, $1,000 (including $200 meals); registration fees, $800; books, $100.______________________________________________________________________________________________c. Tuition and books acquired for graduate education courses required under state law for a schoolteacher in order to renew a provisional certificate: $1,000._____________________________________________________________________________________________d. Bar review courses for a recent law school graduate: $1,000.

Answer 1

IRS agent's law school costs are not deductible. CPA's continuing education, and schoolteacher's courses required for certification renewal, are deductible as they maintain or improve current skills or are mandated for job retention. Bar review courses are not deductible.

Step-by-step explanation:

To determine whether expenditures qualify as deductible education expenses under Reg. Sec. 1.162-5, we must consider if the education maintains or improves skills required in the current business or trade, or is required by law or the employer for maintaining the individual's current job status. Here are the situations:

IRS agent's law school costs: These are generally not deductible because the education qualifies the agent for a new profession.

CPA's continuing education: Deductible as it maintains and improves skills for the current profession.

Schoolteacher's graduate courses: Deductible since they are required to maintain job status.

Law school graduate's bar review courses: Not deductible because this education qualifies them for a new profession.

Qualified education expenses are usually considered "for AGI" deductions, meaning they are deducted from gross income to arrive at adjusted gross income (AGI).

Answer 2

a) Not deductible.

b) Deductible for AGI.

c) Deductible from AGI

d) Not deductible

Step-by-step explanation:

a. Law school tuition and books for a self-employed individual who works in the income tax business and is pursuing a law degree : $2,000:-

Not deductible. Education qualifies a taxpayer for a trade or business.

b. Continuing professional accounting education expenses of $1,900 for a self-employed CPA: travel, $1,000 (including $200 meals); registration fees, $800;books, $100:

This is deductible for AGI. However, out of all that is deductible here only meals will be deducted by half. (($200 x 0.50 = $100) is deductible)

c. Tuition and books acquired for graduate education courses required under state law for a schoolteacher in order to renew a provisional certificate: $1,000.

This is deductible from AGI, assuming the graduate is an employee i.e a school teacher.

d. Bar review courses for a recent law school graduate: $1,000:

Not deductible.