Opinion
Docket No. 26249.
1952-06-16
GEORGE G. COUGHLIN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
David Boyd Chase, Esq., for the petitioner. Robert M. William, Esq., for the respondent.
Expenses incurred in attending the Fifth Annual Institute on Federal Taxation by a practicing lawyer, held, to be personal and educational expenses and hence nondeductible under section 23(a)(1)(A) of the Internal Revenue Code. David Boyd Chase, Esq., for the petitioner. Robert M. William, Esq., for the respondent.
The respondent determined a deficiency of $171.35 in petitioner's income tax liability for the taxable year ended December 31, 1946.
Since the petitioner does not contest all of the adjustments made by the respondent, only the following question is presented:
Did the respondent err in denying a deduction of $305 claimed by the petitioner, a practicing attending the Fifth Annual Institute on Federal Taxation conducted by New York University?
FINDINGS OF FACT.
The petitioner resides and carries on his business in the city of Binghamton, N.Y. His individual income tax return for the calendar year 1946 was filed with the collector of internal revenue for the twenty-first district of New York.
Petitioner is a lawyer who has been engaged in the general practice of the law in the State of New York since 1922. Since 1931 he has continuously been a member of a law firm with offices located in the city of Binghamton.
The petitioner's practice, while general in nature, covers matters pertaining to Federal taxation. His practice contained tax matters prior to the year in question (1946). He was admitted to practice before the United States Treasury Department in 1944.
From 1940 on, the petitioner made it a regular habit to attend various lecture series conducted by his local and other bar associations designed to keep the practitioner informed upon current developments in the law.
The petitioner's firm regularly subscribes to various publications, periodicals, and services related to the field of Federal taxation. Petitioner was expected by his partners to keep abreast of the changes and developments of the law.
In November 1946 the petitioner attended the ‘Fifth Annual Institute on Federal Taxation‘ conducted in New York City under the sponsorship of the Division of General Education of New York University. The Institute on Federal Taxation was aimed specifically at people who had tax work and who knew something about taxes. Students were warned away on the grounds that the Institute was not designed for their benefit. In 1946 the Institute was attended by 408 attorneys, accountants, and others, such as trust officers and corporate executives. The sixth session of the Institute conducted in 1947 was attended by over 1,500 persons from 40 states. The Institute on Federal Taxation was designed by its sponsors to provide a place and atmosphere where practitioners could gather trends, thinking, and developments in the field of Federal taxation from experts accomplished in that field.
Petitioner attended 5 days of the Institute in 1946, November 12, 13, 16, 18, and 20. In his income tax return for the calendar year 1946 he claims the sum of $305 as an ordinary and necessary business deduction. Of this sum, $50 was expended by petitioner as tuition to cover the 5 days of the Institute attended by him. The balance, or $255, was expended by the petitioner to cover travel and lodging expenses incurred in traveling to and from Binghamton, N.Y., the place of his office, and New York City, where the Institute was held.
The respondent disallowed the items of expense in full on the grounds that it was educational and personal expense and, as such, not an allowable deduction for Federal income tax purposes.
OPINION.
HILL, Judge:
The petitioner seeks to deduct a sum expended by him in attending the Fifth Annual Institute on Federal Taxation as an ordinary and necessary business expense incurred by him in the practice of the law.
Respondent bases his position in opposition to the petitioner upon O.D. 984, 5 C.B. 171, a ruling handed down in 1921 which provides that ‘Expenses incurred by doctors in taking post-graduate courses are deemed to be in the nature of personal expenses and not deductible.‘
We think that we must sustain the ruling of the respondent, for in the words of Mr. Justice Cardozo:
SEC. 24. ITEMS NOT DEDUCTIBLE.(a) GENERAL RULE.— In computing net income no deduction shall in any case be allowed in respect of—(1) Personal, living, or family expenses, except extraordinary medical expenses deductible under section 23 (x);
* * * Reputation and learning are akin to capital assets, like the good will of an old partnership. * * * For many, they are the only tools with which to hew a pathway to success. The money spent in acquiring them is well and wisely spent. It is not an ordinary expense of the operation of a business.
Welch v. Helvering, 290 U.S. 111, 115.
Petitioner relies strongly upon the case of Hill v. Commissioner, 181 F.2d 906, overruling 13 T.C. 291. There it was held that outlays made by a school teacher in attending summer courses at Columbia University were deductible as ordinary and necessary business expenses because her attendance at those courses was motivated by the necessity of renewing her teacher's certificate as required by state law for the continuance of her position as a teacher. Suffice it to say that the Court of Appeals expressly limited its decision to the facts before the court.
The expenses incurred by the petitioner in attending the Fifth Annual Institute on Federal Taxation conducted by New York University are not deductible as ordinary and necessary business expenses because of the educational and personal nature of the object pursued by the petitioner.
Reviewed by the Court.
Decision will be entered for the respondent.