Nurse Wins MBA Tax Deduction

A Maryland nurse accomplished two rare feats in her battle with the Internal Revenue Service: She defended herself against the agency's lawyers and won, and she got a ruling that could help tens of thousands of students deduct the cost of an M.B.A. degree on their taxes.

The U.S. Tax Court handed Lori Singleton-Clarke her victory last month, saying the 47-year-old Bryantown, Md., woman had properly deducted nearly $15,000 in business school tuition. The Tax Court ruling should make it easier for many other professionals to deduct the expense of a Master in Business Administration degree.

The IRS's rules on deducting work-related tuition are complicated and onerous, ultimately preventing most students from deducting their tuition. But this case clarifies the rules and will likely lead to more taxpayers taking the deduction, tax experts say.

Wall Street Journal link.

IRS Case finding document link.

Business week - Writing off an MBA:

You can indeed receive tax benefits if you choose to further your education. However, there's a general principle you need to remember in order to maximize your benefit. "If your education expense is for the purpose of maintaining or improving your skills in your current profession, then it's deductible," says Paul Dailey, tax principal at Rothstein, Kass & Co. in New York City.

Article link.

Business Week - MBA: The Mother of All Tax Deductions?

Is MBA tuition tax-deductible? That’s the $15,000 question that’s been plaguing students, accountants, and the court system for years. It’s an important debate this year in particular, when students need all the breaks they can get.

There’s some good news from tax specialist Robert Willens , an adjunct professor of finance at the Columbia Business School, in his recent paper arguing that the deductions are legitimate. But there’s still a lot of room for case-by-case legal interpretation.

Article link.