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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, December 21, 2012

Sheaffer: The Deductibility of Educational Expenses

Dan Sheaffer (Cooley), Letting the Horse Out of the Barn: A Proposal to Treat Educational Expenses Like Other Business Expenses, 28 T.M. Cooley L. Rev. 247 (2011):

The goals of this Article are to highlight and demonstrate the flaws of the current Regulation and propose changes to address those flaws. Part II of this Article briefly discusses the history of educational expenses under Section 162 and the current Treasury Regulation. Part III highlights and demonstrates the fundamental flaws of the current Regulation by examining various cases. In Part IV, this Article offers proposed amendments to the current Regulation that directly address the identified flaws with the newtrade- or-business test. This Article provides concluding comments in Part V.

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I expect Congress to eliminate all deductions for educational expenses, either explicitly or by capping all types of deductions. The fundamental nature of base broadening is taxation of what would normally not be taxable.

Denying education deductions is a form of the least distortionary tax possible: the head tax. In this case it really is a head tax: a tax on what you put in your head!

Posted by: AMTbuff | Dec 21, 2012 11:50:18 AM