Question

Facts: Casey Jones is a 2012 graduate of Tulane University Law School and admitted to practice law in the state of Louisiana. He has been employed by the family general practice law firm of Jones, Jones, and Jones since graduating law school. The firm’s three partners are Casey’s mother, father and uncle. Casey is one of seven other lawyer associates in the firm, which includes a cousin, and five other unrelated persons. There are also 5 non-lawyer clerical staff. No one at the firm has any specialized training in tax matters, but Casey has been trying to handle at least some simple tax issues for the firm. The partners had decided that it would be very good for business if they could establish a tax practice specialty within the firm. As a result, the firm sent Casey to the LL.M (tax) program at the NYU law school to earn an LL.M. degree in taxation. He attended from September 2018 to June 2019, at which time he graduated with the degree of Master of Laws in Taxation (LL.M). While he attended the program in New York the firm continued to pay him his $125,000. per year salary, his tuition and fees of $63,000 and $34,000 of living expense for rent and food at one of the NYU Law School dormitories, as well as his travel expenses to and from New York. Half was paid in 2018 and 2019. Upon graduation he returned to his firm’s New Orleans offices where he worked to establish their tax department. It is now time to file his return for 2019.

Questions: 1. What are the tax effects, if any, of these transactions on Casey and his law firm? 2. Would the result be any different if Casey were a CPA graduate of Tulane’s business school with a BA degree in accounting, and the degree he earned at NYU was a Masters in Tax in accounting in their business school, and Jones, Jones and Jones was a CPA firm? You need not calculate a tax return, but you should state what rules operate on, and interact with their various tax liabilities on the above facts. The rules in effect for tax year 2018 should be used. Please prepare an opinion letter in the format: Facts-Issue-Conclusion-Reasoning- Specify reason and authority for each statement you, citing the authority for each statement in legal citation format.

The paper should be no more than 3 pages double spaced and typewritten. Answer the questions I asked only, not what you wish I had asked. Give valid legal authority for each statement you make, citing the source in each case. Only primary sources are valid, such as the Internal Revenue Code, Regulations and Rulings, and prior Court Decisions. The textbook, annotations in CCH or other texts, or IRS consumer publications, may be useful in focusing your research, but they are not primary authority and may not be used to support your conclusions.

Answer 1

Education expenses are regulated under regulation

26 CFR 1.62-5 EXPENSES FOR EDUCATION

SEC. 1322 (d) as “any property or serviced to an employee of the employer to the extent that , if the employee paid for such property or services, such payment would be allowed as a deduction under section 162 or 167”

Educational expenses are deductible only when

They meet the express requirements of the individual’s employer imposed as a condition for the employment

                                    Or

Improve or maintain the assessor’s skills in his employment or trade or business.

The following expenses that NOT deductible

Is pursued in order to meet the minimum requirements of an existing position

                            Or

Prepares the assesses for a new trade or business

Application of above provisions to present case

In present case the Casey was funded by the firm for his education

CASE 1

As the education pursued by him was to start a new trade or business it does not qualifies the criteria of the REGULATION 1.62-5

HENCE he would be liable to tax on such amount (i.e. Amount received in this year) without regarding the duration course

CASE 2

ANSWER would not change as the even though the courses for improving the knowledge of the case but the same was done for new business hence not allowed as education