Rigorous investment seminar cannot trump tax code's blanket disallowance of such "convention" expenses

The Tax Court has held that an unemployed electrical engineer was prohibited from claiming deductions for expenses related to attending a week-long course to improve his day-trading activities. The court would not inquire beyond the taxpayer's own admission that he was not in the trade or business of day trading, which would have allowed the possibility of a business expense deduction for the seminar expenses, including related travel. Instead, the expenses were classified as investment expenses. As such, they were held to the strict rule of Tax Code Sec. 274(h)(7), which specifically denies any deduction fort the cost of a convention, seminar or meeting as an investment expense.

While the legislative reports behind Code Sec. 274(h)(7) discussed seminar abuses connected with vacation resorts and scheduling that maximized recreational activities, the Tax Court did not see as relevant the fact that the taxpayer worked hard at the seminar. He did not engage in recreational activities, scheduling was tight, the sessions were one-on-one, and the personal benefits of the trip were secondary to the investment benefits. The court stated the Code Sec. 274(h)(7) restrictions are broad and fit these situations.

(Jones III, 131 T.C. No. 3)