Lead Opinion
OPINION
Thе Commissioner determined a deficiency of $588:05 in the petitioners’ Federal income tax for 1969. One issue has been conceded by the petitioners, and the only issue remaining for decision is whether the petitioner, Inger P. Davis, may deduct expenditures for tuition and books as business expenses under section 162(a) of the Internal Revenue Code of 1954.
All of the facts have been stipulated, and those facts are so found.
The petitioners, Kenneth C. Davis and Inger P. Davis, husband and wife, resided in Chicago, Ill., when they filed their petition herein. They filed a joint Federal income tax return for 1969 with the Internal Revenue Service Center, Kansas City, Mo. Mrs. Davis will sometimes be referred to as the petitioner.
In 1961, the United Nations granted the petitioner a fellowship for 1 year of study in the United States in the field of social work education and training. Thereupon,' she came to the United States and enrolled in the School of Social Service Administration at the University of Chicago seeking a master’s degree in social work. She obtained such degree in June 1962.
After the petitioner finished her period of training in the United States, she was under an obligation to return to the Copenhagen School of Social Work and resume her position as lecturer. However, in Junе 1962, she married Mr. Davis and accordingly worked out an arrangement to satisfy her employment obligations to such school by agreeing to give two seminars in Copenhagen and by writing a textbook for social work students in Denmark. She gave the first seminar in September 1962, and the second, in June 1963. After the first seminar, she commenced writing the textbook and completed it by the end of 1963. The textbook was published in 1964 by the Copenhagen School of Social Work under the title “Socialraadgivning — Teоri og Metodik” (Social Work — Theory and Methods).
From September 1964 to March 1965, the petitioner worked for the School of Social Service Administration at the University of Chicago. Although her title was research assistant, she did no research. Her work was primarily that of a teaching assistant; she did a substantial amount of teaching by herself, in addition to assisting a professor at the school.
The petitioner wished to enter the doctoral program at the University of Chicago, аnd she understood that it would be necessary for her to acquire some casework practice before she could be admitted. She secured a position as a caseworker with
The primary purpose of the graduate program in social work, offered by the School of Social Service Administration at the University of Chicago, was to train students for teaching and research in social work. The program was not designed to give advanced training to caseworkers.
The petitioner was enrolled in the Ph.D. program from September 1967 until December 1972, when she received her Ph.D. From July 1, 1967, until October 1, 1971, she was unemployed; she spent this time pursuing her graduate studies as a full-time student. Beginning in October 1971 and continuing through June 1973, she was employed as a lecturer in the School of Social Service Administration. Such position was a nonfaculty academic position.
On October 1, 1973, the petitioner was hired as an assistant professor by the School of Social Service Administration, a position she still held at the time of the trial of this case. An assistant professorship is a full-time faculty position, and it is the general policy of the School of Social Service Administration to require a Ph.D. degree of a faculty member, although there are some exceptions.
On October 4 and November 20,1974, the petitioner, Kenneth C. Davis, wrote to the Internal Revenue Service seeking access to the following materials based upon the Freedom of Information Act (FOIA), 5 U.S.C. sec. 552:
(1) An index of interpretations adopted by the IRS;
(2) Interpretations by the IRS bearing on the question of the deductibility of expenses incurred by one in getting a Ph.D. in 3 years; and
(3) Information about the cases involved in Rev. Rui. 68-580, 1968-
The Commissioner, in his notice of deficiency, disallowed the petitioner’s deduction in the amount of $752 for books and tuition on the ground that such expenditures are not ordinary and necessary business expenses, but are rather nondeductible personal expenses. The petitioners filеd a timely petition with this Court seeking a redetermination of the deficiency determined by the Commissioner.
We must decide whether the petitioners may deduct educational expenses for the year 1969 under section 162(a), which allows a deduction for “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” Although section 162 does not specifically deal with the deductibility of educational expenses, the Treasury regulations do provide useful guidelines with respect to such expenditures. See sec. 1.162-5, Income Tax Regs. Such regulations have repeatedly been approved and applied by the courts in determining the deductibility of educational expenses. See Patrick L. O’Donnell,
The petitioners contend that Mrs. Davis’ educational expenses are deductible under section 1.162-5(a)(l) of the regulations, which provides:
(a) General rule. Expenditures made by an individual for education (including research undertaken as part of his educational program) which are not expenditures of a type described in paragraph (b)(2) or (3) of this section are deductible as ordinary and necessary business expenses (even though the education may lead to a degree) if the education—
(1) Maintains or improves skills required by the individual in his employment or other trade or business, * * *
In support of his position, the Commissioner argues that the petitionеr’s educational expenses are not deductible as business expenses because she was a full-time student and therefore was not carrying on any trade or business in 1969. Alternatively, he argues that if the petitioner was carrying on a trade or business, it was that of a caseworker and that her educational expenses come within the nondeductible categories described in section 1.162-5(b)(2) or (3) of the regulations. The petitioners, on the other hand, argue that Mrs. Davis was сarrying on a trade or business during 1969, and such trade or business is said to be the field of social work. The Commissioner’s first argument presents an interesting issue in the light of the facts of this case. Compare Peter G. Corbett,
The relevant provisions of section 1.162-5(b)(2) of the regulations are:
(2) Minimum educational requirements, (i) The first category of nondeductible educational expenses within the scope of subparagraph (1) of this paragraph are expenditures made by an individual for education which is required of him in order to meet the minimum еducational requirements for qualification in his employment or other trade or business. * * * The fact that an individual is already performing service in an employment status does not establish that he has met the minimum educational requirements for qualification in that employment. * * *
(ii) The minimum educational requirements for qualification of a particular individual in a position in an educational institution is the minimum level of education (in terms of aggregate college hours or degree) which under theapplicable laws or regulations, in effect at the time this individual is first employed in such position, is normally required of an individual initially being employed in such a position. If there are no normal requirements as to the minimum level of education required for a position in an educational institution, then an individual in such a position shall be considered to have met the minimum educational requirements for qualification in that position when he becomes a member of the fаculty of the educational institution. The determination of whether an individual is a member of the faculty of an educational institution must be made on the basis of the particular practices of the institution. * * *
Determining whether the petitioner’s activities cohstitute á trade or business and the nature thereof for purposes of section 162(a) is a question of fact. Morton v. Commissioner,
The situation in this case is analogous to that considered in Arthur M. Jungreis,
When we consider the facts of the case now before us, it is clear that the petitioner’s educational expenses were not incurred merely to maintain the skills in the work that she had . been performing but were to enable her, and did in fact enable her, to meet the minimum education necessary to secure a new position as a permanent faculty member of the University of Chicago. Before she enrolled in the Ph.D. program in 1967, she had spent many years in the field of social work, and she had performed a variety of tasks in that field — she had been a lecturer, performed research, authored a textbook, and served as a caseworker. Despite the length and variety of her experience, she was not then qualified to become a member of the faculty of the University of Chicago, for she lacked the Ph.D. degree normally required of a member of such faculty. When she apрlied for admission to the Ph.D. program, she declared that she was doing so in order to carry on teaching and research in the field of social work. She did not need the degree to carry on the work previously performed by her, but she did need it to move up to the position as a member of the faculty at Chicago. Under these circumstances, it is quite apparent that her education in 1969 was not merely to continue the kind of social work performed by her but qualified hеr to meet the minimum requirements of a new position in that field. Her situation is essentially no different than that in Jungreis where the petitioner was already working in the general field of history, but he was pursuing additional education in order to qualify as a member of the faculty in the field of history.
Moreover, the petitioner’s employment during the latter part of her Ph.D. program, and subsequent thereto, reinforces our conclusion. From October 1971, while Mrs. Davis was still working on her doctorate, until June 30,1973, she wаs employed as a lecturer at the School of Social Service Administration, a nonfaculty position. Mrs. Davis obtained her Ph.D. sometime in December of 1972, and at the beginning of the next school year,
The petitioner, Kenneth C. Davis, who is a widely recognized and respected authority in the field of administrative law, vigorously argues that we should apply to the actions of the IRS a duty of consistency, as articulated by Judge Friendly in Sirbo Holdings, Inc. v. Commissionеr,
Under the FOIA, Mr. Davis requested the Commissioner to provide him with letter rulings relating to other taxpayers claiming a deduction for educational expenses. The Commissioner refused to disclose such rulings, but Mr. Davis has initiated no action in a District Court to seek an order under the FOIA directing the Commissioner to disclose the rulings. He contends that since the Commissioner’s actions should be subjected to the duty of consistency, this Court should compel him to produce the rulings. Mr. Davis recognizes that the FOIA expressly provides that its provisions are to be enforced by the District Courts of the United States, but he asserts that the grant of such jurisdiction to the District Courts is not exclusive and
Mr. Davis also challenges our decision in Bernard E, Teich-graeber,
It has long been the position of this Court that bur responsibility is to apply the law to the facts of the case before us and determine the tax liability of the parties before us; how the Commissioner may have treated other taxpayers has generally been considered irrelevant in making that determination. Bernard E. Teichgraeber,
In this case, we have concluded that it is unnecessary for us to face and decide the question of whether a duty of consistency should be applied to the actions of the Commissioner. The present Rules of Practice and Procedure of this Court authorize discovery of relevant nonprivileged matters by means of interrogatories or notices to produce (Rules 70, 71, and 72), and such rules took effect on January 1, 1974, sо that prior to the trial of this case, the petitioners had ample opportunity to seek discovery of those materials. Yet, Mr. Davis never sought discovery of such materials and therefore never presented to this Court the question of whether to order production of them. His failure to seek discovery cannot be justified by our decision in Bernard E. Teichgraeber, supra, for that opinion was issued subsequent to the trial of this case. Since the petitioners never
Despite Mr. Davis’ forceful argument, we have concluded that there is no reason for this Court to undertake the enforcement of the FOIA. Under that Act, he could have commenced an action in the District Court to compel the Commissioner to produce the requested matеrials, and had he commenced such action, the District Court would have had an opportunity to pass on whether such materials should be disclosed under that Act. That Act establishes an orderly procedure for its enforcement, and we see no compelling reason to create additional procedures. Mr. Davis has given no reason to indicate why he did not pursue the procedures established by that Act or as to why those procedures were not adequate in this situation.
Moreover, it is clear that this Court should not undertake generally to enforce the FOIA. There would be absolutely no occasion for us to do so except in connection with tax disputes. In connection with tax controversies that are before us, we have our own procedures to compel the production of relevant evidence, and there has been no showing that those procedures are inadequate. In fact, the use of discovery may enable a party to obtain materials that might not be disclosed under the FOIA. Compare Blair v. Oesterlein Machine Co.,
Decision will be entered for the respondent.
Notes
All statutory references are to the Internal Revenue Code of 1954 as in effect during the year at issue.