Legal Issues

Whether or not the education expense incurred by Mary is a deductible expense.  The deductibility of education expense is a factual issue which requires an examination of the facts obtaining in the present case.

The provision in the regulations implementing the Federal Income Tax Law is explicit.  Section 1.162-5 thereof clearly provides two (2) requisites for the deductibility of education expenses, in this case MBAHCM programme, to wit if the education maintains or improves skills required in the current job or if the education meets the express requirements of the individuals employer or the requirements imposed by law to maintain his or her employment status.

The circumstances obtaining in the case of Mary are in all fours with the first paragraph.  As expressly recognized in the law, it is sufficient for MBAeducation expense to be deducted when the education maintains or improves skills required in the current job.  It is a widely known principle in statutory construction that when the language of the law is clear, the same no longer requires further construction.  As in this case, the language of the provision could not be made any clearer.  It is sufficient that the education maintains x x x the skills required in the current job (emphasis supplied).  It could not be made any clearer that the same can likewise be deducted when the education improves the skills required from employees.

This provision of law can be applied without regard to the fact that the employee is qualified and is accepted for another position in another trade or business (Singleton-Clarke vs. Commissioner of Internal Revenue Summary Opinion, December 02, 2009).

Clearly, the achievement of Mary of further taking her masters degree keeps her abreast of current developments in the field of nursing, in relation to the roles of nurses as aids of doctors in major medical procedures and in the functions of being a performance management coordinator.  It could not be gainsaid that nurses play a major role in medical practices.  Their valuable assistance in medical operations for instance, could not be doubted and could not be dispensed with, the same with the position presently held my Mary.  It is but important that they are made aware of current trends and developments that medical experts are up to.  Experience may not be enough to equip them with recent advancements.  Thus, the masters degree clearly provides them with the opportunity of keeping them informed.

Second point is the requirement required by the employer himself for the position held by Mary.  The position of a Performance Management Coordinator prefers an employee to have a Masters Degree in Nursing.  Clearly, the position requires an employee not only to have several years of experience on any related job but must also have obtained further education.  This is a tacit recognition on the part of the employer that its employees must be kept abreast of medical advancements and developments which can be obtained by completing a degree on further studies.  Moreover, it is a tacit recognition that the skills required in the previous jobs held by Mary, while needed in the present position, are a bit different with the requirements in the present job, the reason why a preference for further studies is needed.  This is in line with the principle enunciated by the high court in the case of Weiler v. Commissioner, 54 T.C. 398, 401-402 (1970).  Moreover, it can not be gainsaid that the preference for a masters degree on the employee is required to do an advantage for the employer.  As such, the tuition fee reimbursement is considered as falling under business expense, and consequently is deductible from the employers gross income, for purposes of taxation (No Author, 2010).

The foregoing premises considered, Cherry Hospital may rightfully reimburse and be entitled to a deduction on the education expenses for the MBA of Mary.