Can I deduct second bar exam?

[hamiltonho]

I am a lawyer from Canada and already have passed the bar exam 12 years ago in Canada. I moved to Massachusetts in 2017 and took the Mass bar exam. My understanding is that the expenses for my Mass bar exam are tax deductible because I am not entering a new profession. Is this correct? If so, can I also deduct the bar preparation courses and other related expenses for my second bar? 

[Rick19744]

Unfortunately not.  

Regulation 1.162-5(b)(2)(iii) states that these expenses constitute education required to meet the minimum educational requirements for qualification in your trade or business and, thus, the expenditures for such courses are not deductible.

In particular see example 3.

[tws801]

I believe the answer above (or below) is incorrect. Regulation 1.162-5(b)(2)(iii) deals with minimal education requirements to enter a profession. The question deals with someone who is already in the profession of law. Expending money on a review course to be licensed in an additional state does not constitute money spent to meet the minimal educational standards to enter a profession. In this case, the person has already entered the field of law, and is simply getting licensed in an additional state. Example 3 in the Regs, which is referenced in the answer, deals with an individual who has yet to become a lawyer (e.g., Taxpayer had only completed 2 years of his law degree prior to leaving school. He then works temporarily as a research assistant in a law firm - not as a lawyer - and upon returning to school attempts to deduct his 3rd year of tuition and his initial bar exam review course. This in nondeductible because the 3rd year of law school and the initial bar exam review course are considered expenditures required to meet the minimal education requirements to enter the field of law.)

[tws801]

Meant to add that this is a difficult question since we're dealing with two different countries. It would be best to contact a CPA or Tax Attorney who has experience with this type of situation.

[Rick19744]

While you may disagree with the response provided, it does not make it correct.  You noted in your second reply that this is a difficult question.....then why did you originally just disagree?  

The original poster IS NOT an attorney in the United States.  The expenses are not deductible if they are required in order to meet the minimum requirements of an existing position, OR prepares you for a new trade or business.

The poster cannot meet either of these: can't be an existing attorney in the U.S. so there is not existing position and passing the bar qualifies this individual for a new trade or business in the U.S.

I won't list my credentials, but I am certainly qualified to make an informed decision based on the limited facts and I stand by my original response.  The poster is more than welcome to follow the decision or find someone that is qualified that may have a different opinion.  

Preparer's and the IRS have disagreements all the time.  That is why there is the Tax Court, 94 District Courts, 13 Appeals Courts and the Supreme Court.  

[VipTony]

Hi,

Interesting discussion. I'm licensed in two US states and recently took a 3rd US state bar so I can expand my legal and consulting business to that state. Haven't found anything directly on point, so do you think the analysis changes based on those facts? Or would the IRS likely disallow an expense for the 3rd state bar, since they would be minimum qualifications for that state, despite the fact I am already in the profession?

[NCperson]

@VipTony - some of those posts are quite old.  Let's begin with if you are a W-2 employee, the expenses are not tax deductible at all. (that is in effect from 2018-2025)  if you are a contractor / self-employed and this is a business expense to expand your business, then tax deductible.