Source: https://casetext.com/case/lee-v-cir-3
Timestamp: 2019-02-17 04:50:08
Document Index: 723209003

Matched Legal Cases: ['§ 162', '§ 262', '§ 262', '§ 162', '§ 1', '§ 1', '§ 1', '§ 1', '§ 1', '§ 162']

Lee v. C.I.R, 723 F.2d 1424 | Casetext
Lee v. C.I.R
723 F.2d 1424 (9th Cir. 1984)
Leev.C.I.R
United States Court of Appeals, Ninth CircuitJan 17, 1984
…See e.g. Glenn, 62 T.C. at 276–77. “An educational expense is deductible only if the primary purpose is to…
Estate of Rockefeller v. C.I.R
…The Tax Court has also disallowed a deduction for helicopter training expenses by an airline pilot. Edward C.…
No. 81-7845.
Submitted January 5, 1984.
In this appeal we consider whether the Tax Court held correctly that Edward Lee's educational expenses were not deductible under I.R.C. § 162. We agree with the Tax Court's conclusion that helicopter flight training was not required to maintain or improve the skills required in Lee's employment as a commercial airline pilot.
The Commissioner determined that the expense of the helicopter lessons was a nondeductible personal expense under I.R.C. § 262. The Tax Court concurred, saying that the flight training did not maintain or improve the skills required for Lee's employment, and that "the helicopter flight training was part of a program of study leading to Mr. Lee's qualification in a new trade or business." Lee v. Commissioner, 50 T.C.M. (P-H) ¶ 81-026 (1981).
The cost of education is generally a nondeductible personal expense. See I.R.C. § 262; Sharon v. Commissioner, 591 F.2d 1273, 1274-75 (9th Cir. 1978), cert. denied, 442 U.S. 941, 99 S.Ct. 2883, 61 L.Ed.2d 311 (1979). Some educational expenses may be deductible, however, if they qualify as "ordinary and necessary" business expenses under I.R.C. § 162. The expense of education to maintain or improve skills required for one's trade or business may generally be deducted as an ordinary and necessary business expense. Treas. Reg. § 1.162-5(a)(1) (1983).
Treas. Reg. § 1.162-5 also allows deductions for educational expenses that "meet the express requirements of the individual's employer, or the requirements of applicable law or regulations, imposed as a condition of the retention by the individual of an established employment relationship. . . ." Treas. Reg. § 1.162-5(a)(2). Lee does not contend that he took the helicopter flight training to meet Delta or FAA requirements.
Treasury Regulations, however, establish two categories of educational expenses that are personal in nature, and not deductible as ordinary and necessary business expense, though the education may maintain or improve skills: (1) expenses for minimum educational requirements that the taxpayer must have to qualify in his employment or other trade or business, Treas. Reg. § 1.162-5(b)(2); and (2) expenses for education that will also qualify the taxpayer for a new trade or business. Treas. Reg. § 1.162-5(b)(3).
We consider as a question of fact whether a taxpayer may deduct an educational expense as an ordinary and necessary business expense under § 162. E.g., Ford v. Commissioner, 487 F.2d 1025, 1025-26 (9th Cir. 1973). We affirm the Tax Court's findings on factual questions unless those are clearly erroneous. Thompson v. Commissioner, 631 F.2d 642, 646 (9th Cir. 1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3110, 69 L.Ed.2d 972 (1981).
Here, the Tax Court's finding that the helicopter training was not related to Lee's employment as a commercial pilot is not clearly erroneous. The cases cited by Lee do not convince us otherwise. In each, the court expressly found that the taxpayers had been encouraged to make the flight expenditures to maintain the skills required for their employment, see Colangelo v. Commissioner, 49 T.C.M. (P-H) ¶ 80,455 (1980); Shaw v. Commissioner, 38 T.C.M. (P-H) ¶ 69,120 (1969), or the training satisfied specific requirements of the employment. See Beckley v. United States, 490 F. Supp. 123, 126 (S.D.Ga. 1980); Knudtson v. Commissioner, 49 T.C.M. (P-H) ¶ 80,455 (1980).
We need not decide this issue, however. Because we conclude that the Tax Court did not clearly err in determining that the helicopter flight training did not improve Lee's proficiency as an airline pilot, Lee may not deduct the expense of the flight training whether or not airline and helicopter pilots are in the same trade or business. See Treas. Reg. 1.162-5(a). The judgment of the Tax Court is affirmed.