A former law partner (whose online compliment I gratefully but belatedly acknowledge) said that any tax return more complicated than a 1040EZ involved judgment calls. So it was easy to belittle the caller after the fact.
Today we have a lesson that proves the foregoing. It’s a designated hitter from STJ Leyden, whom I welcomed to Tax Court back on 3/24/16 “Straight from The Sidewalks of New York.” I said then that “I have no doubt STJ Leyden will give the taxpayers a fair shake in Tax Court.”
Here’s Megan Zhao Creigh and John L. Creigh, 2017 T. C. Sum. Op. 26, filed 4/27/17. It’s Meg Z’s story, as John doesn’t show for the trial.
Meg Z was a computer whiz who designed, developed, cared for and cooked up the meat upon which feed the electronic boxes, large and small, that rule our lives. She rose to be project manager, bossing around other adepts.
Meg Z quit for family reasons, but wanted to start her own consulting shop. She tried to get a permanent job as an entrée to going freelance, and tried to get a contract gig, but nothing panned out. So Meg Z went for an Executive MBA.
I have my own views on the subject, in which the words “tennis racket” figure prominently.
Howbeit, Meg Z enrolled, got the degree in the year in question, and sought to write the whole cost off.
Now y’all will doubtless remember Alex Kopiagora did the same. You don’t remember? Well, review my blogpost “Presently Engaged While Unemployed,” 8/2/16.
Now Alex’s case was another Sum. Op., so STJ Di doesn’t cite it, but Judge Nega waved Alex through.
Of course, Meg Z didn’t help her own case much.
“Petitioner wife testified that in her prior employment her tasks and skills centered on analyzing and designing computer software systems to improve or replace business processes to make them more efficient. Her projects also involved designing, developing, testing, and implementing computer software systems. Her education was in software engineering, which enabled her to understand how computer software systems worked and how to use or modify them to improve business processes. Petitioner wife testified that in her prior employment she was not involved in business strategy development or marketing. Her management skills were limited to managing people on a particular project.
“Petitioner wife also testified that the courses she took in the E.M.B.A. program ‘did not really help in my area, in terms of project management.’ The E.M.B.A. program courses petitioner wife completed were varied and encompassed a large number of business fields: economics, management, finance, accounting, marketing, mergers and acquisitions, business policy, negotiations, valuation, and international business. Petitioner wife’s skills in her prior employment, except for perhaps managing people on her projects, did not include skills related to any of the studied business fields.” 2017 T. C. Memo. 27, at p. 12.
Meg Z also testified she hoped her new knowledge would expand her consulting work into other fields. Game over. Cross into new pastures, and your Section 162 business education deduction bites the dust.
Meg Z gets hit with a 20% chop, and of course blames her accountant. But Meg Z doesn’t introduce evidence that she told the whole story to a credentialed individual, and received advice upon which she relied in good faith.
Going for an MBA, even an Executive MBA, while unemployed, isn’t an automatic shootdown. This is the kind of case where weighing the facts, and even more importantly properly presenting the facts, can make all the difference.
Alex had counsel; Meg Z did not.