Tuesday, July 29, 2008
The Tax Court yesterday denied a taxpayer's claimed § 212 deduction for the expense of a five-day course in day trading. Serrato v. Commissioner, 131 T.C. No. 3 (7/28/08):
Petitioner spent approximately 6.5 hours a day Monday through Friday reviewing, studying, and executing trades. In order to improve his day trading abilities, petitioner signed up for a 5-day one-on-one course called DayTradingCourse.com (the course) that he had read about online. The course was held in Cartersville, Georgia, approximately 750 miles from petitioner’s home in Florida. Petitioner drove by himself to the course. Petitioner stayed at a modest local hotel just off the interstate highway approximately 5 miles from the course location. The course consisted of 5 days of intensive training and instruction taught by Paul Quillen. ...
[Petitioners claimed a § 212 deducted for $6,053.06:] $5,247 for the course, $416.64 for lodging, $224.10 for round trip travel from petitioner’s home to and from Cartersville, Georgia, where the course was held, $145.32 for food, and $20 for a course book. ... Section 212(1) allows as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income. Petitioners argue that the course was necessary in order for petitioner to become a better day trader and to maximize profits and minimize losses on his trading activity.
Section 274(h)(7) provides that no deduction shall be allowed under § 212 for expenses allocable to a convention, seminar, or similar meeting. Petitioners argue that the course is not a convention, seminar, or similar meeting as contemplated by § 274(h)(7). We disagree. ...
Merriam-Webster’s Collegiate Dictionary (9th ed. 1985) defines a seminar as a meeting for giving and discussing information. Over 5 days petitioner received hours of information about day trading in the course taught by Mr. Quillen. In the light of the terms and purpose of § 274(h)(7), we conclude that the course was a seminar, or a similar meeting within the scope of that statute, and therefore the expenses relating to the course cannot be deducted pursuant to § 212(1).