Court Opinion

ID: 4480318
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:12.798701+00
Date Added: 2024-06-11T07:57:32.612692
License: Public Domain

Fay, J., dissenting: As trier of the facts, I respectfully disagree with the majority which disallows a deduction to petitioner for the cost of his analytic training. I believe that the majority opinion not only violates tlie spirit of the income tax regulation in question but also disregards its specific wording.1  After receiving his medical degree in 1954 and completing his internship, petitioner pursued his career in psychiatry, chosen while still in medical school. He undertook 3 years of residency, 1 in neurology and 2 in psychiatry, which he completed in 1958. At this point, petitioner had met all the minimum requirements established by the American Medical Association for the practice of psychiatry: Petitioner then served for 2 years as a medical officer in the U.S. Air Force, during which time he practiced psychiatry. Upon leaving the Air Force, petitioner joined the staff of the Boston Veterans’ Administration Plospital as staff psychiatrist. His duties there also included the teaching of psychiatry to residents at the hospital. Clearly, petitioner was a qualified and practicing psychiatrist. It was then that petitioner began his analytic training at the institute. In order to prevail in this case, petitioner must show that the educational expenses for analytic training were incurred primarily for the purpose of maintaining or improving a skill which he already possessed, to wit, psychiatry. As stated in the regulations, whether or not a taxpayer satisfies this requirement “shall be determined upon the basis of all the facts of each case.”2  A reading of the regulation reveals that whether or not educational expenditures are deductible depends upon the “primary” purpose for which the education was undertaken. Cosimo A. Carlucci, 37 T.C. 695 (1962); Rev. Rul. 60-97, 1960-1 C.B. 69. A determination of this subjective test can be made only after taking into consideration all the facts and circumstances of the particular case. Accordingly, decisions in other cases although helpful, do not .and cannot control here. The only witness in this case was the petitioner. His uncontradicted testimony regarding the reason for which he undertook analytic training can be summarized as follows: Petitioner testified that he spends his time divided into three segments. He does research in the field of psychiatry, he teaches psychiatry to medical students, residents, and social workers, and he maintains a small private practice of psychiatry. He further testified that the analytic training offered at the institute would greatly aid him in all these segments of his work. I disagree with, the majority that the record in the instant case “would hardly warrant a finding that petitioner did not intend to hold himself out as a practicing psychoanalyst” when he completed his analytic training. Having had the opportunity to observe the petitioner, I found this testimony not only believable and uncontradicted but also realistic.3 Petitioner testified that some doctors undertake analytic training for the purpose of engaging solely in the practice of psychoanalysis, while others do so for the help such knowledge will give them in their field of psychiatry. Petitioner stated he was in the latter category. I believe and would find that after taking into consideration all the facts of this case, petitioner undertook analytic training primarily to maintain and improve his skill in his specialty — • psychiatry — and not for the purpose of acquiring a new skill or to qualify himself as a psychoanalyst in order to engage exclusively in such a practice.4  The fact that by undertaking this training petitioner might be acquiring a new skill is of no importance. See Cosimo A. Carlucci, supra at 702. This is conceded by respondent. Rev. Rul. 60-97, supra at 71. Even this Court has recognized that the acquisition of a new skill does not preclude the deduction where the new skill was helpful and beneficial in maintaining and improving a skill already possessed by the taxpayer. The best examples of this are the numerous cases which have been decided by this Court allowing accountants, internal revenue agents, an insurance adjuster, and an Air Force employee to deduct the cost of obtaining a bachelor of laws degree. Clearly a law school education which qualifies one to enter the field of law constitutes the acquisition of a new skill — a skill not previously possessed by any of the taxpayers involved. Nevertheless, the deduction was allowed. See also Welsh v. United States, 329 F. 2d 145 (C.A. 6, 1964); Fortney v. Campbell, — F. Supp. — (N.D. Tex. 1964, 13 A.F.T.R. 2d 1619, 64-1 U.S.T.C. par. 9489). I can see no difference between those cases and the present one. See also John S. Watson, 31 T.C. 1014 (1959). On the basis of the foregoing, I would hold for petitioner. FORRESTER, agrees with this dissent.   The pertinent part of sec. 1.162-5, Income Tax Regs., upon which both parties rely provides that: (a) Expenditures made by a taxpayer for his education are deductible if they are for education (including research activities) undertaken primarily for the purpose of: (1) Maintaining or improving skills required by the taxpayer in his employment or other trade or business, * * * Whether or not education is of the type referred to in subparagraph (1) of this paragraph shall be determined upon the basis of all the facts of each case. * * *    See fn. 1, supra.    That petitioner was not a skillful witness was very apparent during his appearance on the witness stand. However, despite the vagueness of petitioner’s testimony on direct examination, when asked by respondent on cross-examination whether he “undertook the analytic training * * * to improve [his]\ field as a psychiatrist,” petitioner stated unequivocally that such was his purpose.    The word “primary” does not mean “only” or “exclusive.” The word itself presupposes that the taxpayer may have more than one purpose for undertaking the education. So in this case, where the petitioner may make use of his analytic training in his private practice of psychiatry by utilizing the “skill” of psychoanalysis on his patients, this does not necessarily mean that his primary purpose was to obtain this “skiU” for the purpose of exclusively engaging in the practice of psychoanalysis. I recognize that petitioner was not unaware that this training would enable him to practice psychoanalysis. However, based upon this record, this was not petitioner’s primary purpose for undertaking the analytic training. See Marlor v. Commissioner, 251 F. 2d 615 (C.A. 2, 1958), reversing 27 T.C. 624 (1956). Devereaux v. Commissioner, 292 F. 2d 637 (C.A. 3, 1961), reversing and remanding a Memorandum Opinion of this Court.