Coughlin v. Commissioner, 203 F. 2d 307 (2d Cir. 1953)

Holler, Hubert J.

English

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Buffalo Law Review Volume 3 Number 1 Article 66 12-1-1953 Income Tax—Expenses of Attending Tax Institute Held Deductible Hubert J. Holler Follow this and additional works at: https://digitalcommons.law.buffalo.edu/buffalolawreview  Part of the Taxation-Federal Commons Recommended Citation Hubert J. Holler, Income Tax—Expenses of Attending Tax Institute Held Deductible, 3 Buff. L. Rev. 150 (1953). Available at: https://digitalcommons.law.buffalo.edu/buffalolawreview/vol3/iss1/66 This Recent Decision is brought to you for free and open access by the Law Journals at Digital Commons @ University at Buffalo School of Law. It has been accepted for inclusion in Buffalo Law Review by an authorized editor of Digital Commons @ University at Buffalo School of Law. For more information, please contact lawscholar@buffalo.edu. BUFFALO LAW REVIEWINCOME TAX-EXPENSES OF AT TENDING TAXINSTITUTE HELD DEDUCTIBLEMember of a law firm attended an annual tax institute toobtain current tax knowledge and then deducted the expenses onhis personal income tax return. Held, reversing the Tax Court:Such expenses are deductible under § 23 (a) (1) (A) of the Inter-nal Revenue Code. Coughlin v. Commissioner, 203 F. 2d 307 (2dCir. 1953)."In computing net income there shall be allowed as deductions• . . all the ordinary and necessary expenses . . . in carrying onany trade or business " INT. REV. CODE § 23 (a) (1) (A)[italics added].'What is ordinary and necessary is a question of fact to bedecided in each individual case. Commissioner v. Heininger, 320U. S. 467, 470 (1943); Helvering v. Highland, 124 F. 2d 556, 562(4th Cir. 1942).Expenses of attending professional conventions have con-sistently been held to be deductible as ordinary and necessarybusiness expenses, e. g., doctor at medical convention, Coffey v.Commissioner, 21 B. T. A. 1242 (1931);- lawyer at American BarAssociation convention, Ellis v. Commissioner, 15 B. T. A. 1075(1929); chemist at scientific conventions, Silverman v. Commis-sioner, 6 B. T. A. 1328 (1927) ; and clergyman at church convention,Shutter v. Commissioner, 2 B. T. A. 23 (1925).Traveling expenses of chemists taking refresher courses werealso held to be deductible, Pacific Grapes Products Co. v. Commis-sioner, 17 T. C. 1097 (1952), as were the expenses of attendingsummer school where they were not to improve taxpayer's situa-tion but rather to maintain her teaching position. Hill v. Commis-sioner, 181 F. 2d 906 (4th Cir. 1950).The courts have held educational expenses to be personal andnon-deductible when they "bettered" or "improved" the tax-payer's position, e. g., those of writing a doctoral dissertation,Lampkin v. Commissioner, 11 T. C. M. 576 (1952); of studying inEurope to increase prestige, Cardozo v. Commissioner, 17 T. 0. 3(1951); of obtaining a degree in engineering, Larson v. Commis-sioner, 15 T. C. 956 (1950); and of receiving vocal instructionsanticipating singing engagements, Driscall v. Commissioner, 4B. T. A. 1008 (1926).The Commissioner originally ruled that a teacher's expensesfor attending summer school courses, 0. D. 892, 4 Cum. BuLL. 209(1921), and a doctor's expenses for post graduate courses, 0. D.894, 5 Cum. BuLL. 171 (1921), were personal and therefore notBECENT DECISIONSdeductible. IiT. REv. CODE § 24 (a) (1).. In order to conform tothe Hill case, he modified 0. D. 892, supra, but interpreted thiscase in an attempt to limit its implications. I. T. 4044, 1951-1CuM. ButL,. 16. This ruding emphasized that the court stressedthe fact that the taxpayer incurred the expenses to maintain herposition; to preserve, not to expand or increase; to carry on, notto commence.In the instant case the court used the Hill case as the basis forits decision. Coughlin did considerable work which required himto be skilled in federal taxation. Therefore, a knowledge of recentdevelopments was necessary to maintain his position.It appears that the opinion in the Couglin case may leaveroom for a contention that such expenses might not be deductibleto a lawyer not particularly engaged in the practice of tax law.But since current tax law permeates all fields of -law, and knowl-edge of it is a necessity for all lawyers, this view would be highlyunrealistic and unfortunate. The Tax Court should be first torealize this.Hubert J. HollerINCOME TAX--TREASURY STOCK DIVIDENDSHELD TO BE TAXABLEA corporation with only common stock agreed to repurchasethe interest of its majority stockholder after three contracts forthe purchase of this interest by the taxpayer-stockholders indi-vidually had been cancelled. A lease. of the corporation's premiseswas executed as part of the consideration in all these contracts.Previously, the taxpayers had been instrumental in the corpora-tion's repurchase of the interest of two minority stockholders pur-suant to an agreement to resell to them after the acquisition of themajority interest. Upon the acquisition of the majority interesta pro-rata distribution of this newly purchased treasury stock wasmade to the shareholders of record. Subsequently, the two minor-ity stockholders repurchased their shares. Held: The distributionwas a taxable stock dividend. Schkmitt v. Commnissioner, 20 T. C.No. 44 (May 14, 1953).A common stock dividend to common shareholders was heldto be a non-taxable stock dividend where there was no change inthe stockholder's proportionate interest. Eisner v.- Macomber,252 U. S. 189 (1919); Helvering v. Griffiths, 318 U. S. 371 (1942).However, a common stock dividend to preferred stockholders isa taxable stock dividend because it either changes the proportion-ate interest or the character of the stockholder's ownership.

Income Tax—Expenses of Attending Tax Institute Held Deductible

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Income Tax—Expenses of Attending Tax Institute Held Deductible

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