No Business Expense for MBA Tuition

A taxpayer represented himself at trial in US Tax court regarding his dispute with the IRS over his attempt to deduct his MBA tuition as a business expense. I have no doubt that this man ignored his accountant’s advice or prepared his own tax return, was audited, and lost at trial.

In a ruling Monday, U.S. Tax Court Judge Kathleen Kerrigan decided against Adam Edward Hart and his wife Lisa Denning Hart. Adam Hart enrolled in an MBA program with a concentration in finance at Rollins College in Winter Park, Fla., in January 2009. That year, he was employed by a company called Priority Healthcare Distribution, and later after brief periods of unemployment for ADP Totalsource and Walgreen, but none of his employers required him to attend MBA courses. He now works for McKesson as a drug sales representative.

He received a Form 1098-T tuition statement for 2009 reporting qualified tuition expenses of $18,600. When he and his wife filed a joint tax return for that year, they claimed the same amount as an itemized deduction for unreimbursed business expenses on Schedule A, noting that it was for “MBA tuition.” They also applied the threshold of 2 percent of adjusted gross income to the itemized deduction, reducing the amount to $17,138. However, the IRS disallowed the deduction. Read the entire story here.

Now he owes additional tax and interest of more than $10,000. Although some people have been successful “do-it-yourselfers” however the odds are against you in a complex situation such as this, contact an experienced professional to navigate perilous tax disputes.