Here is a recent question from Michael about the deductibility of educational seminars.
Q: I am having an IRS audit and they are trying to not allow my deduction for taking a personal development seminar. Tony Robbins like seminar. I am in networkmarketing? and I thought that those were deductable. I cannot find any case law? can you help?
A: First and foremost, I always suggest to people that they hire a qualified CPA to handle any IRS audit. It's cheaper than handling it yourself as you will always end up paying less tax if a good CPA is in charge of the audit. Also, it seriously reduces the emotional strain of the audit because you don't have to deal with the IRS. That said, let me answer the specific question.
Section 212 and Section 274(h)(7) of the Internal Revenue Code specifically disallows deductions for seminars taken for investment purposes (i.e., production of income). These are probably the rules being cited by the IRS auditor as why your seminar is not deductible.
However, Section 162 allows a deduction for all "ordinary and necessary" expenses carried on in a trade or business. Michael's challenge is proving to the auditor that the Tony Robbins course specifically relates to his business. Again, this is where an experienced CPA would be useful in conducting the negotiation and proving the relevance of the course to the business.
For more about how you could take advantage of the expert negotiation team at ProVision, please visit our website at http://www.provisionwealth.com or just pick up the phone and call us toll free at 1-866-467-5809.
Warmest regards,
Tom
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