Can I deduct the cost of my MBA?

11Jan10

According to this Yahoo! news article (link), a nurse in Maryland found a way to deduct the cost of her MBA from her income taxes.

While the article itself doesn’t go into detail about how she accomplished this feat (other than keeping good records, kept fighting after getting denied multiple times, taking her fight to Tax Court), I felt that knowing her specifics might help me get some more $ back from Uncle Sam.  I’m currently an MBA student at the Ross School of Business, and since I’m paying for this MBA out of pocket, I’m trying to save money wherever I can.

So, I dug up the summary opinion, and tried to make some sense of the case.  Here’s what my untrained (in many things, but namely taxation and law) mind came up with -

Case Facts:

• Nurse had a long history of patient care
• Moved into a management role at her hopital
• Obtained an MBA (from online school University of Phoenix) to become more efficient in her management role
• Her work did not reimburse her for any education related expenses

Quoting from the Court’s Judgment:

The final remaining inquiry then is whether as an objective matter the MBA/HCM qualifies petitioner for any  new trade or business, not just the particular job at St. Mary’s that she acquired. Respondent contends that the MBA/HCM does qualify petitioner for a new trade or business, because in respondent’s words, under the regulation “the tasks and activities she was qualified for before she obtained the degree are different than those which she is qualified to perform afterwards”. We disagree.
An MBA degree is different from a degree that serves as foundational qualification to attain a professional license. For instance, this Court had denied deductions for law school expenses, because a law degree qualifies a taxpayer for the new trade or business of being a lawyer. See, e.g., Bodley v. Commissioner, supra; Weiler v. Commissioner, 54 T.C. 398, 401-402 (1970).

An MBA is a more general course of study that does not lead to a professional license or certification. Allemeier v. Commissioner, T.C. Memo. 2005-207. This Court has had differing outcomes when deciding whether a taxpayer may deduct education expenses related to pursing an MBA, depending on the facts and circumstances of each case. The decisive factor generally is whether the taxpayer was already established in their trade or business.

My interpretation:

Please keep in mind that I am not a lawyer and have never studied tax law.  Here’s what I’m reading:

• The nurse was already working in similar jobs pre and post MBA.  So the MBA did not open new doors immediately after she obtained it
• Since the MBA does not grant or confer any sort of professional license or certification, it is different than a law degree.  In other words, its possible to work in post-MBA jobs without actually earning an MBA.  It would be functionally impossible to work as a bar-certified attorney without earning a JD from an accredited law school.
• To deduct the cost of an MBA, I would need to return to Consulting, which was my previous line of work.

Sounds like an interesting theory to try…any tax folks or lawyers have a different read on this?  A copy of the court’s judgment is here (link)

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Truly Amazing

10Jan10

I know that I owe you guys a major update in my life, but in the meantime, check this out.

Its all CGI (Computer Generated Imagery) and its very vivid and incredible.  Wait for the effect around 6:40, incredible.

If this doesn’t load up, check it out at the author’s website (http://vimeo.com/7809605?hd=1)

The Third & The Seventh from Alex Roman on Vimeo.

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Sharad Updates!

06Jul09

Sorry that I haven’t had a chance to update the blog in awhile, but here’s a quick update of my recent activities.  I’ll go into more detail in a week or so, but since I’m paying by the minute, I’ll be brief here.

I’m in Africa!  I flew in to Nairobi, Kenya just over a week ago, and spent two nights exploring this vibrant and interesting (and dangerous) city.  I checked out the National Museum and would have impressed my old 10th grade bio teacher (miss you Mr. Tucksherer) that I still remembered that “Astrhrolopithicus died for us”.

I met up with Matt and Erica, and we took a trip down to Moshi, Tanzania to pay our respects to Mount Kilimanjaro.  After a grueling 7 day journey, they were wed on the mountaintop, while I stayed at base camp 6 (approx 4600m above sea level) due to altitude sickness.

Today, I returned back to Nairobi solo, and an trekking out to Masaui Mara National Park to hopefully see some of the annual wildebeest migration.

that was more detail that I thought I’d give, but this trip has been intense, interesting, grueling,and mad all at the  same time.

will post back with picture and much more commentary when I’m stateside!

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Kilimanjaro Bag is Packed!

23Jun09

Weights about 30 lbs, feels comfortable. This will be an interesting 3 weeks !!

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Tags: africa, kelty