Carl is out of luck with respect to the deduction of

This preview shows page 24 - 26 out of 26 pages.

Carl is out of luck with respect to the deduction of his expenses. Section 274(m)(2) denies a deduction for travel as a form of education. Note the section does not preclude deductibility of travel to obtain education (see problem 2, above) or other travel that is necessary to engage in activities that give rise to deductible education. Cf. ' 67(g). 4. Although the statute does not specifically disallow a deduction here, the Conf. Comm. Rpt. of the 1986 Act states at pages II-31 to 32:
140 The conferees also are concerned that some taxpayers may be claiming deductions under section 162 for travel and other costs of attending a convention, seminar, or similar meeting ("convention") at which each convention participant is furnished individually with video tapes of lectures, etc. on topics related to the taxpayer's trade or business, to be viewed at the convenience of the participant, and at which no other significant business-related activities occur during the time allotted for the convention. In such situations, the taxpayer does not participate in activities normally conducted at a business-related convention, such as participating in meetings, discussions, workshops, lectures, or exhibits held during the day, and simply views the tapes at his or her own convenience. Because permitting deductions for travel, meal, or entertainment costs associated with such minimal business-related activities would allow taxpayers to treat expenditures that essentially are for vacation, recreation, or other personal purposes as business expenses, the conferees wish to make clear that no deduction is allowable under section 162 for travel or related costs of attending such a convention. This clarification does not disallow deductions for the travel and other costs of attending a convention that involves activities otherwise deductible under present law which are related to the taxpayer's trade or business merely because the convention utilizes video-taped or televised materials where the participants must attend a convention session in person to view the video-taped materials, assuming that the generally applicable requirements for deducting expenses of attending a convention are satisfied. Also, this clarification does not disallow deductions for costs, other than travel, meal, or entertainment expenses, of renting or using business-related video tape materials.
141 PROBLEM Page 392: 1(a). Taxpayer would be allowed to deduct a loss of $7,000 under ' 165(a) as modified by ' 165(c)(1). Taxpayer = s amount realized from insurance is $15,000 with an adjusted basis of $22,000 resulting in a $7,000 loss under ' 1001(a). Although premature, Taxpayer = s loss would be both a ' 1231(a)(4)(C) subhotchpot loss and possibly a ' 1231(a)(3) main hotchpot loss. Cf. Reg. ' 1.165-7(b)(1). 1(b). If the automobile was worth $10,000 after the accident, Taxpayer = s ' 165(a) as modified by ' 165(c)(1) loss as a result of Reg. ' 1.165- 7(b)(1) would be $20,000 the lesser of: (1) $20,000, the change in the fair market value of the property, $30,000 less $10,000 or (2) $22,000, the adjusted basis of the property. The $20,000 amount would be reduced under ' 165(a) by the insurance of $15,000 resulting in a $5,000 currently deductible loss. The regulation effectively limits Taxpayer =

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture