costs incurred by New York attorney for a California bar review course were nondeductible
How later courts described this case
- costs incurred by New York attorney for a California bar review course were nondeductible
- a licensed California attorney different trade or business from a licensed New York attorney
- taxpayer must capitalize $ 801 bar examination fees and expenses to practice law in California because amount was too large to disregard its capital nature
Written by the judges who cited it.
The opinion
Sterrett, J., dissenting: I disagree with the majority’s conclusion that the costs incurred by petitioner in acquiring the licenses involved herein are amortizable over his life expectancy. Although the fees in question are undoubtedly business related, it seems clear to me that the realities of life preclude any rational method by which the useful life thereof can be estimated with any reasonable accuracy. As the majority recognizes at page 530, “Furthermore, when an attorney commences the practice of law, it is impossible to anticipate where his work will take him. He cannot with certainty establish what work he will receive and what bar memberships will be useful to him.” What the licenses do is afford petitioner the opportunity to earn fees for appearances in court for an indefinite period of time; namely until his retirement or withdrawal from practice, his death, or in the case of the State licenses his commencement of practice in another State, whichever event occurs first. Such indefiniteness should preclude amortization of the cost of the licenses. Formico v. Commissioner, 491 F.2d 788 (9th Cir. 1974); Ralph Vander Hoek, 51 T.C. 203 (1968).
To allow the deductions for amortization of these fees is a triumph of the esoteric over the practical.
Scott, J., agrees with this dissent.