1973 U.S. Tax Ct. LEXIS 71">*71
Petitioner, an accountant, entered law school in 1966, and received his bachelor of laws degree in 1969.
60 T.C. 814">*814 Respondent has determined a deficiency of $ 161 in petitioners' income tax for the calendar year 1969. The sole issue for our decision is whether petitioners are entitled, under
FINDINGS OF FACT
Some of the facts were stipulated and are so found.
Petitioners Morton S. Taubman and Ilene P. Taubman are husband and wife, who, at the time they filed the petition herein, 1973 U.S. Tax Ct. LEXIS 71">*73 resided in Laurel, Md. They filed their joint Federal income tax return for the calendar year 1969 with the district director of internal revenue, Baltimore, Md. Ilene P. Taubman is a party to this proceeding solely by virtue of having filed a joint income tax return, and the designation "petitioner" will hereinafter refer only to Morton S. Taubman.
In June of 1965, petitioner obtained a bachelor of science degree in accounting from the University of Baltimore. Soon afterwards, in July 1965, he became employed as a revenue agent with the Internal Revenue Service, a position he held until 1968. While working as a revenue agent, petitioner decided that he wished to acquire a more in depth knowledge of Federal tax law. Upon determining that legal studies would be the most worthwhile in helping him to achieve such goal, petitioner entered the University of Baltimore, College of Law, as a night student, sometime in 1966. In November 1968, while still pursuing such legal studies, he became a C.P.A., and about the same time, took a position with the national accounting firm of Lybrand, Ross Bros. and Montgomery. In 1972, he became associated with the C.P.A. firm of Levanthol, Kretstein1973 U.S. Tax Ct. LEXIS 71">*74 & Horwath, and worked in their tax department. Petitioner's specialty was in the area of real estate. Much of his work consisted of rendering advice to attorneys and their clients in connection with public and private offerings of stock in real estate ventures.
In 1969, the taxable year involved in the instant case, petitioner obtained a bachelor of laws degree from the University of Baltimore. 2 That year petitioner took the following courses: Taxation (2 semester hours), administrative law (2 semester hours), practice court (2 semester hours), conflict of laws (2 semester hours), Federal jurisdiction (1 semester hour), insurance (1 semester hour), and Federal estate and gift taxation (2 semester hours). In connection with his attendance at law school in 1969, he incurred the following expenses:
Tuition (12 semester hours at $ 18 an hour) | $ 216 |
Books and course materials | 248 |
Travel | 300 |
764 |
1973 U.S. Tax Ct. LEXIS 71">*75 60 T.C. 814">*816 In 1969, petitioner was a member of the following professional associations: District of Columbia Institute of Certified Public Accountants, Maryland Institute of Certified Public Accountants, American Institute of Certified Public Accountants.
In 1970, petitioner passed the Maryland State bar examination and became a member of the Maryland bar. He has continued his pursuit of legal studies by attending tax courses offered by Georgetown University, College of Law, master of laws program.
On his 1969 joint return, petitioner claimed a deduction of $ 764 for expenses incurred in connection with his attendance at law school in 1969. In his notice of deficiency, respondent disallowed in full such claimed deduction, and in addition, disallowed $ 12 of a claimed $ 522 deduction for medical expenses.
OPINION
The sole issue for our decision is whether respondent properly disallowed a $ 764 deduction claimed by petitioner for expenses incurred in connection with his attendance at law school in 1969. 31973 U.S. Tax Ct. LEXIS 71">*77 It is respondent's contention that such expenses, which included costs of tuition, books, other course materials, and travel, were not "ordinary and necessary" business expenses1973 U.S. Tax Ct. LEXIS 71">*76 within the meaning of
1973 U.S. Tax Ct. LEXIS 71">*78 Petitioner does not dispute that the aforementioned regulation which posits an objective test would deny him any deduction under
We reject petitioner's argument, for respondent has a long and well-recognized ability to change regulations, despite a lack of change in statutory language, and then to apply such altered regulations, prospectively; assuming, of course, that the new regulations are valid interpretations of the statute.
In addition, the new regulation has been found to be a valid exercise of the Commissioner's rule-making authority in numerous decisions of this1973 U.S. Tax Ct. LEXIS 71">*81 Court.
These regulations applied prospectively only and did not purport to reach back to earlier years when the taxpayer relied on a different rule or practice. Tax statutes and tax regulations never have been static. Experience, changing needs, changing philosophies inevitably produce constant change in each. One making an election in the 1925 return took the risk that the method of treatment of depletion might be changed by the Congress, or, where power existed, by the Commissioner. Any other conclusion would make the application of changes pursuant to regulations, 1973 U.S. Tax Ct. LEXIS 71">*82 though prospective, dependent on fortuitous circumstances under which each taxpayer made such an election. Rigidity, as well as confusion, in administration of tax laws would be the result. [
We find that it was proper for respondent to apply only the new
60 T.C. 814">*819 Applying the new regulation to the instant case, 1973 U.S. Tax Ct. LEXIS 71">*83 we find that petitioner's studies in 1969 at the University of Baltimore, College of Law, were "part of a program of study being pursued by him which would lead [and did in fact lead] to qualifying him in a new trade or business."
While it is true, that petitioner may never leave the IRS, or may rejoin a public accounting firm, or even become a tax attorney, he nevertheless is qualifying himself as a lawyer, a trade or business separate and distinct from that in which he is now engaged and his educational expenses are nondeductible. [
Similarly we find, under the objective test set forth in the regulation, that petitioner, now a member of the Maryland bar, is not entitled to a deduction1973 U.S. Tax Ct. LEXIS 71">*84 of $ 764 for expenses incurred in pursuit of his bachelor of laws degree.
For the first time, in his brief, petitioner raises what appears to be an equal protection attack on the new regulation. The regulation, he points out, allows teachers to take deductions for courses which train them for positions as principals or guidance counselors. Individuals already in a trade or business, however, are not allowed such deductions for the expenses incurred in acquiring a law degree, even when such legal training would assist them in their current trade or business. We will not consider this contention, however, under our well-established rule that constitutional issues not raised specifically in the pleadings are not properly before the Court.
However, even were such issue to have been properly pleaded, we would not consider it in the instant case. Petitioner has presented no evidence upon which an argument could be made that teachers are in as much a separate trade or business from principals and guidance counselors, as are accountants from lawyers. In the absence of any information or evidence upon which such a judgment could be made, we find it inadvisable to consider the argument, and refuse to do so.
We considered a similar equal protection argument in
1973 U.S. Tax Ct. LEXIS 71">*86 Because we have upheld respondent's disallowance of the deduction claimed by petitioner for educational expenses, we also uphold respondent's disallowance of $ 12 of the amount claimed by petitioner for medical expenses.
1. All section references are to the Internal Revenue Code of 1954, as amended, unless otherwise indicated.↩
2. While the program in which he had enrolled normally demanded a 4-year attendance at law school, petitioner had attended summer school, in addition to regular classes, and hence was able to graduate a year earlier.↩
3. It is not in dispute that if we uphold respondent's disallowance of said educational expenses, that we must also uphold his disallowance of $ 12 of petitioner's claimed $ 522 medical expense deduction. This latter disallowance arises because, by disallowing the claim for educational expenses, respondent thereby increased petitioner's adjusted gross income, thus decreasing the medical deduction allowed under sec. 213.↩
4.
(a)
(1) Maintains or improves skills required by the individual in his employment or other trade or business, or
(2) Meets the express requirements of the individual's employer, or the requirements of applicable law or regulations, imposed as a condition to the retention by the individual of an established employment relationship, status, or rate of compensation.
(b)
* * * *
(3)
(
(
(
(
(ii) The application of this subparagraph to individuals other than teachers may be illustrated by the following examples:
5. The regulation was amended to its current form in 1967 by
6. See fn. 5
7. Thus, petitioner's reliance on
8. In an appropriate case we may not entirely agree with the Ninth Circuit, for in other situations it may be arguable that respondent's regulations exhibit a favoritism toward the teaching profession which is discriminatory. See Judge Tannenwald's dissent in