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Tuition Deduction C-Corp
T.C. Memo. 2022-19
Docket Nos. 4113-19, 4647-19. Filed March 9, 2022
The taxpayer claimed a business expense deduction for the C-Corp owners' son-in-law (not an employee) for the costs of a coding course at a University. The son-in-law had no previous coding experience.
A taxpayer is not entitled to deduct personal, living, or family expenses. § 262.
The taxpayer was challenging the disallowance of the tuition payment deduction.
The taxpayers also claimed office equipment expenses relate to the purchase of iPads, iPhones, a speaker, which was disallowed by the IRS. The US Tax court reversed the disallowance and allowed the taxpayers to claim the IPads/ Iphones deduction since it was proven that employees were using them at work.
The taxpayers' explanation why they deducted the tuition expense (above) is that they used the son-in-law's services for their website and paid him via paying his tuition for him. The son-in-law wasn't an employee at the C-Corp. The C-Corp and the son-in-law didn't have an agreement that proves this intention. The US tax court concluded that the C-Corp "paid the tuition without any expectation of a return and thus did not have a business purpose for the payment. Thetuition was a personal expense, and the C-Corp is not entitled to deduct it".
Tuition Deduction C-Corp
T.C. Memo. 2022-19
Docket Nos. 4113-19, 4647-19. Filed March 9, 2022
The taxpayer claimed a business expense deduction for the C-Corp owners' son-in-law (not an employee) for the costs of a coding course at a University. The son-in-law had no previous coding experience.
A taxpayer is not entitled to deduct personal, living, or family expenses. § 262.
The taxpayer was challenging the disallowance of the tuition payment deduction.
The taxpayers also claimed office equipment expenses relate to the purchase of iPads, iPhones, a speaker, which was disallowed by the IRS. The US Tax court reversed the disallowance and allowed the taxpayers to claim the IPads/ Iphones deduction since it was proven that employees were using them at work.
The taxpayers' explanation why they deducted the tuition expense (above) is that they used the son-in-law's services for their website and paid him via paying his tuition for him. The son-in-law wasn't an employee at the C-Corp. The C-Corp and the son-in-law didn't have an agreement that proves this intention. The US tax court concluded that the C-Corp "paid the tuition without any expectation of a return and thus did not have a business purpose for the payment. Thetuition was a personal expense, and the C-Corp is not entitled to deduct it".