Discussion:Educational Expenses
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Discussion Forum Index --> Advanced Tax Questions --> Educational Expenses
Discussion Forum Index --> Tax Questions --> Educational Expenses
| 25 April 2008 | |
| Reg. 1.162-5 discusses conditions under which educational expenses are deductible by an individual. I'm looking for authority for a corporation to deduct such expenses paid on behalf of its 100% shareholder but unable to locate it. Do you know?
Thanks, John | |
| 25 April 2008 | |
| Tuition and books. The taxpayer has been a real estate broker for 35 years. He's getting a masters degree in real estate and states that the purpose is to improve his existing skills - consistent with Reg. 1.162-5 (a)(1). However, see below.
The client came to me because his tax preparer died. In reviewing the past returns, I saw a material amount of Educational Expenses deducted by the client's wholly owned c-corp. I've always deducted relatively immaterial "continuing education" expenses for clients on all types of returns without thinking to look it up - it seems so basic. However, in this case the expenses are large - as in $50K per year for the last 2 years. The client insists that his prior CPA had researched this and found documentation that, apparently, has eluded me thus far. My other hangup regarding this issue is that the corp. is wholly owned by the taxpayer. Therefore, he's requiring the educational expenses of himself. Otherwise, Reg. 1.162-5(a)(1) wouldn't apply and the expenses wouldn't be deductible. That seems to stretch the purpose of the reg. | |
| 25 April 2008 | |
| Did you do a search of past discussions? There's a good one here, although it's with regard to an S-corp, but significantly, Riley says, "I see no problem with deducting the cost of the MBA program at the corporate level. However, the real question is whether the shareholder can exclude such benefits from gross income," and there's more discucssion about that point.
This question has come up a lot, from different perspectives - try out various search terms in the yellow search box, you might find other discussions that are on point for you. | |
