[Pete]

An earlier post questioned the deduction of the CPA examination prep fees (It’s not deductible).

I’m curious if the random classes I took to fulfill the CPA license (30 extra credit hours) would be deductible because i’m more than a half time student. Despite reading the contrary, Turbo tax took the deductions for me with the program.

At the very least, I should be able to deduct the accounting classes, which I took or can I not even consider myself an accountant, without the CPA license? I could argue that fraud detection or negotiation would be useful to my current employer in my current industry job.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[Anonymous]

On the face of it, without knowing your entire tax situation, your options are :

1)Take the tuition and fees deduction
2) Take the Lifetime Learning Credit ( with the assumption that you already have a Bachelor's degree).

The LLC gets phased out depending on marital status and income level, so if I'm reading your question correctly, no need to worry about the purpose of the classes.

And as a side note, because the TurboTax engine prompts you for certain income or deductible items, doesn't mean you actually get it. I'd hope the software has the best interest of the user in mind, but you just never know.

[Pete]

Thank you. That made my day. The software gave me the LLC, so it looks like I can in fact take the deduction. At least I get credit for taking these damn classes.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[Accountant183748]

I answered this in the other post and I don't think it's deductible based on the following article. It could be wrong though.

It is my understanding that you cannot deduct anything related to the CPA for tax purposes – this includes additional classes needed to meet the 150 rule or any other credits.

https://www.forbes.com/sites/anthonynitti/2016/12/21/tax-geek-wednesday-deductibility-of-professional-education-expenses/#6f6f48474fc4

CPA Review Courses

In Revenue Ruling 69-292, the IRS concluded that the cost of a CPA review course is a nondeductible, personal expense. The Revenue Ruling draws a parallel to example 3 of Regulation Section 1.162-5(b)(iii), which denies a deduction for a bar review course to a lawyer:

E, who has completed 2 years of a normal 3-year law school course leading to a bachelor of laws degree (LL.B.), is hired by a law firm to do legal research and perform other functions on a full-time basis. As a condition to continued employment, E is required to obtain an LL.B. and pass the State bar examination. E completes his law school education by attending night law school, and he takes a bar review course in order to prepare for the State bar examination. The law courses and bar review course constitute education required to meet the minimum educational requirements for qualification in E's trade or business and, thus, the expenditures for such courses are not deductible.

In addition, the courts have held (see Cooper) that the business of being a CPA is fundamentally different from that of a non-CPA; thus, the expenses for a CPA review course are not deductible under test #4, as the education prepares you for a new trade or business.

Classes Necessary to Meet the 150-hour CPA requirement

Around 15 years ago, most states added another hurdle to the CPA licensing process by requiring applicants to have 150 credits for AICPA membership. Unfortunately, most bachelor's degrees require only 120 credits, meaning it became fairly standard for a college graduate to accept an accounting job, sit for the exam, and then start cranking out additional credits in Music Appreciation at the local community college in an effort to reach the 150-hour requirement.

As stated above, the courts have held that the trade or business of being a CPA is fundamentally different from that of a non-CPA. As a result, the expenses for the additional 30 credits are not deductible, because they prepare or qualify you for a new trade or business; that of being a fully-licensed CPA.

[Pete]

That makes sense; however, I would NOT claim i'm taking the classes for the CPA license. I would state that i'm taking the classes for my current position.

Obviously, I probably couldn't get away with claiming classes, like health psychology, but a class like negotiation would be bettering my career as an accountant or within the current business. The fact that i'm taking classes relevant to the CPA exam as well should not really matter, at least in theory. For example, a few cases have gone in favor of an MBA deduction while others have gone against it. An MBA could arguably qualify you for a new position while at the same time bettering your current positions.

The courts seem really divided on this issue as well, unfortunately; not a very black and white issue.

B=84 This exam was such a b**** that I thought I failed-don't know how these things work
A=76 Slacker I am, I'll happily take it
R=81 I LOVE taxes
F=80 I don't wanna get banned for an expletive I'm thinking with "yea" proceeding it

[Anonymous]

I specifically remember in last' week's lecture Garrity saying the CPA prep fees are not deductible, because tuition that you pay to get minimum required credentials doesn't qualify. There, I actually remembered something! 🙂 But regular tuition for classes you might have taken potentially could, if you were enrolled in a degree program….

[Author]

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