How to show that education which enhances a taxpayer's skills is deductible

Article Abstract:

Regulation 1.162-5 of the Internal Revenue Code defines deductible education expenses as those that are ordinary and necessary to carry on a trade or business, including that of an employee, as long as the education maintains or improves skills needed for the trade or business and it meets legal- or employer-imposed requirements allowing the employment status or rate of compensation to be maintained. An analysis of several rulings on matters pertaining to deductible education expenses is provided, and the factors required to allow the deduction of educational expenses, including tests for deductibility and several other considerations, are described.

Education and state, Education policy, Education, Tuition tax credits

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Planning to ensure recognition of allocations under new partnership capital account rules

Article Abstract:

For partnership income and deduction allocations to be recognized after 1986, the partnership agreement must specify that liquidating distributions are based on capital account balances maintained on a new modified tax basis. The provisions required to ensure recognition of allocations under Regulation 1.704-1(b) and the effective dates are discussed in the second of a two-part article. Also discussed are the consequences of a deemed termination, tax items not susceptible to the substantial economic effect concept, side agreements, substantiality, and planning considerations.

Research, Interpretation and construction, Tax planning, Partnership, Partnerships, Income tax, Legislation, Legislative process

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