Question

Kelly is a self employed tax attorney whose practice primarily involves tax planning During the year, she attended a three-day seminar regarding new changes to the tax law. She incurred the following expenses: she attended a three-day seminer $420 Meals Course registration 370 178 a. How much can Kelly deduct? (Do not round intermediate celculations. Round your answer to 2 decimal places.) b. Kelly believes that obtaining a CPA license would improve her skills as a tax attorney. She enrolls as a part-time student at a local college to take CPA review courses. During the current year, she spends $1,600 for tuition and $320 for books. How much of these expenses can Kelly deduct?

Answer 1

Part A

Lodging................................. $400.00

Meals (50% deductible)........ $36.50

Registration................... ........$370.00

Transportation............ ..........$170.00

Total Deduction......................$976.50

Part B

Kelly cannot deduct any expenses because these expenses are related to new branch of job. Education expenses are deductible if they are for education that (1) maintains or improves skills required by the taxpayer in his employment or (2) meets the express requirements of an employer or law. However, the education expenses are not deductible if the education qualifies the taxpayer for a new trade or business. Since obtaining a CPA qualifies Kelly for a new profession (although related), the expenses are not deductible.