DocketNumber: No. 6795-99
Citation Numbers: 2001 T.C. Memo. 192, 82 T.C.M. 322, 2001 Tax Ct. Memo LEXIS 225
Judges: \"Foley, Maurice B.\"
Filed Date: 7/26/2001
Status: Non-Precedential
Modified Date: 4/18/2021
*225 Decision will be entered under Rule 155.
MEMORANDUM FINDINGS OF FACT AND OPINION
FOLEY, JUDGE: By notices dated March 17, 1999, respondent determined deficiencies in and additions to petitioner's Federal income taxes as follows:
Additions to Tax
________________________________________
Year Deficiency Sec. 6651(a)(1) Sec. 6651(a)(2) Sec.
____ __________ _______________ _______________ ____
6654(a)
1995 $ 13,590 $ 1,835 $ 1,346 $ 412
1996 12,562 1,922 897 436
Unless otherwise indicated, all section references are to the Internal Revenue Code for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. After concessions, the issues remaining for determination are who has the burden of proof; whether a 1996 settlement payment is, pursuant to
FINDINGS OF FACT
When the petition was filed, petitioner resided in Titusville, Florida. During 1995 and 1996, petitioner was married to Yvette Managan. Petitioner and Mrs. Managan did not file individual Federal income tax returns for the taxable years 1995 and 1996.
During 1995 through June 1, 1996, petitioner was employed as the Director of Management Services for Brevard County, Florida. On January 26, 1996, petitioner was severely injured (i.e., injuries to his head, neck, back, etc.) in a motorcycle accident. As a result of these disabilities, Brevard County asked petitioner to resign and, on June 1, 1996, he did so.
Petitioner consulted an attorney and sought a settlement from Brevard County. Petitioner discussed with Tom Jenkins, the County Supervisor of Brevard County, a potential wrongful termination claim against Brevard County under the Americans with Disabilities Act,
In 1992, Mrs. Managan began taking courses at the University*227 of Central Florida (UCF). During 1995 and 1996, petitioner and Mrs. Managan operated a Schedule C business, Monticello Research Group (MRG), which conducted environmental audits of real property. During this same period, Mrs. Managan attended UCF. While attending UCF, Mrs. Managan did quality control work as an independent contractor for a professor. In 1996, Mrs. Managan received a bachelor's degree in chemistry. In 1997, she began working in a chemistry laboratory for BTR Labs.
During 1996, shortly after his motorcycle accident, petitioner began constructing a boat, the Dinky Dau. Petitioner intended to use the boat to fish for lobster off the coasts of Honduras and Nicaragua. In 1996, petitioner paid $ 975 to his attorney to obtain a lobster fishing license from Honduras.
OPINION
As a preliminary matter, petitioner contends that, pursuant to
Respondent determined that the $ 15,920 payment from Brevard County was subject to tax. Petitioner contends that this payment was excludable from income pursuant to
A settlement of claims arising under the ADA, if paid on account of personal injury or sickness, may qualify for exclusion from income pursuant to
Respondent determined that petitioner was not entitled to deduct the cost of Mrs. Managan's studies at UCF. Petitioner contends that this course of study did not prepare Mrs. Managan for a new trade or business, but it merely allowed her to maintain and improve her skills, as well as to enhance the reputation of MRG.
Educational costs incurred to maintain or improve skills required by the individual's trade or business are deductible as ordinary and necessary business expenses, unless they are incurred to meet minimum educational requirements for a taxpayer's trade or business or qualify the individual in a new trade or business.
Prior to taking her 1995 and 1996 courses at UCF, Mrs. Managan performed environmental audits for MRG. The chemistry degree, however, qualified her for a new trade or business. Indeed, she used the degree to obtain employment in a laboratory, in 1997.
We need not address the burden of proof relating to*231 this issue because the documentary evidence and Mrs. Managan's testimony established that Mrs. Managan's UCF classes qualified her for a new trade or business. Accordingly, petitioner is not entitled to deduct Mrs. Managan's 1995 and 1996 educational expenses.
Respondent determined that petitioner is required to capitalize legal fees paid to obtain a lobster fishing license from Honduras and expenses (i.e., cost of utilities and moving the partially completed vessel) relating to building the Dinky Dau. Petitioner contends that these are deductible business expenses.
We conclude that the burden of proof relating to this issue is on petitioner. Petitioner presented no evidence that the attorney's fees paid*232 to obtain a lobster fishing license provided a benefit limited to 1996. In addition, petitioner's testimony established that the utility and moving expenses were incurred as part of the construction process and are subject to
Contentions we have not addressed are moot, irrelevant, or meritless.
To reflect the foregoing,
Decision will be entered under Rule 155.