                  T.C. Summary Opinion 2009-120



                     UNITED STATES TAX COURT



                CORINNE N. ORTEGA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 6092-08S.              Filed August 3, 2009.



     Corinne N. Ortega, pro se.

     Michael Medina, for respondent.



     ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.1    Pursuant to section

7463(b), the decision to be entered is not reviewable by any




     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 2004,
the taxable year in issue.
                               - 2 -

other court, and this opinion shall not be treated as precedent

for any other case.

     Respondent determined a deficiency of $3,877 in petitioner’s

Federal income tax for 2004.   The issue for decision is whether

petitioner is entitled to deduct on Schedule A, Itemized

Deductions, educational expenses of $19,885 under section 162(a).

We hold that she is not.

                            Background

     Some of the facts have been stipulated, and they are so

found.   We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

     When the petition was filed, petitioner resided in the State

of New York.

     After graduating from college with a bachelor’s degree in

psychology, petitioner earned a master’s degree in clinical

psychology from the University of Nebraska in 1996.     From April

1997 until August 2003 petitioner worked for the State of

Nebraska Department of Corrections (Corrections) as a Mental

Health Practitioner II (MHP II).   To qualify for this position,

petitioner was required to be licensed as a mental health

practitioner2 under Neb. Rev. Stat. Ann. sec. 38-2122




     2
        “Mental health practitioner” was the name of the license
held by petitioner as well as the title of the position she held
at Corrections.
                                 - 3 -

(LexisNexis 2008)3, hold a master’s degree, and have 3,000 hours

of postdegree supervised counseling experience.    In addition to

being licensed as a mental health practitioner, petitioner was

also certified as a psychological assistant.

     As an MHP II, petitioner provided mental health services for

individuals, families, and/or groups under the supervision of a

licensed psychologist.   Petitioner’s primary job responsibilities

included individual and group therapy with inmates, intake

screening of new inmates, suicide risk assessment, provision of

acute mental health care, mental health conditions screening, and

some staff training.   In addition, as a psychological assistant

petitioner was authorized to (but did not in fact in her position

as an MHP II) perform psychological testing at the master’s level

under the supervision of a psychologist.

     While working for Corrections, petitioner enrolled in, and

completed, course work at the University of Nebraska leading to a

doctoral degree in psychology.    A final requirement for the

doctoral degree was completion of a 1-year internship.

Petitioner’s internship required her to relocate to attend a

program with the U.S. Department of Justice, Federal Bureau of

Prisons (BOP) at the Federal medical center in Devens,


     3
        Neb. Rev. Stat. Ann. sec. 71-1314, in effect for 2004, is
now Neb. Rev. Stat. Ann. sec. 38-2122 (LexisNexis 2008). There
is no substantive change. See 2007 Neb. Laws 463, 740.
Subsequent references to Neb. Rev. Stat. Ann. are to the current
(LexisNexis 2008) edition.
                                - 4 -

Massachusetts.    Although petitioner actually completed the

internship in Massachusetts, she was enrolled in a course called

“Internship” at the University of Nebraska.

     Petitioner terminated her employment with Corrections in

August 2003 in order to begin the internship with BOP in

September 2003.    Petitioner completed the internship in early

September 2004.    The internship was a supervised program of study

with the stated objective of preparing interns for entry-level

service as practicing clinical or counseling psychologists.

     After completing the internship and graduating with a

doctoral degree, petitioner became licensed in New York as a

psychologist.    Had petitioner returned to Nebraska, she would

have been eligible to be licensed there as a psychologist.

Without the doctoral degree, petitioner could not have been

licensed in New York in the field of mental health, as New York

did not then permit an individual to practice in that field with

only a master’s degree.

     Petitioner started employment as a staff psychologist with

the BOP in New York at the end of 2006.    The minimum education

required for a staff psychologist with the BOP was a doctoral

degree in clinical psychology or a closely related field.      As a

staff psychologist, petitioner was charged with making

professional decisions concerning the diagnosis and treatment of

inmates under her care, with consultative supervision from the
                                - 5 -

chief of psychology services.   Petitioner’s primary job

responsibilities included individual and group therapy with

inmates, intake screening of new inmates, suicide risk

assessments, acute mental health issues screening, psychiatric

referrals, and crisis intervention.     In addition, petitioner

administered and interpreted various psychological tests.      As

indicated in the job description, a staff psychologist could also

be tasked to supervise the work of graduate-level psychologist

trainees, practicum and intern students, and paraprofessional

counselors.   Furthermore, a staff psychologist could assume the

responsibilities of the chief psychologist in his or her absence.

                            Discussion4

     Section 162(a) generally allows as a deduction “all the

ordinary and necessary expenses paid or incurred during the

taxable year in carrying on any trade or business”.     Expenditures

made by an individual for education are deductible as ordinary

and necessary business expenses if the education maintains or

improves skills required by the individual in her employment or

other trade or business.   Sec. 1.162-5(a), Income Tax Regs.

However, the general rule under section 1.162-5(a), Income Tax

Regs., does not apply if the expenditures fall within either of

two specified categories; i.e, they are nondeductible



     4
         We decide this case without regard to the burden of
proof.
                                - 6 -

expenditures if:    (1) They are incurred to meet the minimum

education requirements for qualification in a taxpayer’s trade or

business; or (2) they qualify the taxpayer for a new trade or

business.    See Robinson v. Commissioner, 78 T.C. 550, 552 (1982);

sec. 1.162-5(b), Income Tax Regs.

       Respondent argues that the educational expenses incurred by

petitioner qualified her for a new trade or business and

therefore are nondeductible.    Petitioner contends that the

educational expenses are deductible because she worked in the

field of psychology both before and after the educational

expenses were incurred.    On balance, the facts favor the

Government, and for that reason we hold for respondent.

       An individual who, through education, improves her skills in

an existing trade or business may also become qualified for a new

trade or business.    Thompson v. Commissioner, T.C. Memo. 2007-

174.    If the education in question qualifies the taxpayer to

perform tasks and activities significantly different from those

she could perform before the education, then the education is

deemed to qualify the taxpayer for a new trade or business.

Robinson v. Commissioner, supra at 552 (citing Browne v.

Commissioner, 73 T.C. 723, 726 (1980), Diaz v. Commissioner, 70

T.C. 1067, 1074 (1978), affd. without published opinion 607 F.2d

995 (2d Cir. 1979), Glenn v. Commissioner, 62 T.C. 270, 275

(1974), and Weiszmann v. Commissioner, 52 T.C. 1106, 1110 (1969),
                               - 7 -

affd. 443 F.2d 29 (9th Cir. 1971)).    The mere capacity to engage

in a new trade or business is sufficient to disqualify the

expenses for the deduction.   See Weiszmann v. Commissioner, supra

at 1111.

     Although the duties of an MHP II and a staff psychologist

overlapped, the MHP II position was a subordinate position under

the supervision of a psychologist, such as a staff psychologist.

As an MHP II, petitioner provided mental health services under

supervision to inmates.   The psychological assistant

certification permitted petitioner to perform psychological

testing only under the supervision of a psychologist.

     Conversely, as a staff psychologist, petitioner provided

mental health services to inmates with only consultative

supervision from the chief of psychology services.   A staff

psychologist could also supervise master’s-level psychologist

trainees, interns, and paraprofessional counselors; consequently,

petitioner could supervise others in positions comparable to the

position she held at Corrections and as an intern.   Moreover, the

staff psychologist could function as the acting chief

psychologist when that person was absent from the institution.

Thus, as a staff psychologist, petitioner was a peer of the chief

psychologist, not a subordinate as in her Corrections position

and internship.
                               - 8 -

     This Court has disallowed the educational expense deduction

in cases where the taxpayer was in the same general field both

before and after the educational expenses were incurred and the

education qualified the taxpayer for a new trade or business in

that same general field.   E.g., Robinson v. Commissioner, supra

at 552-557 (licensed practical nurse and registered nurse);

Johnson v. Commissioner, 77 T.C. 876, 878-880 (1981) (real estate

agent and real estate broker); Glenn v. Commissioner, supra at

275 (licensed public accountant and certified public accountant);

Antzoulatos v. Commissioner, T.C. Memo. 1975-327 (intern

pharmacist and registered pharmacist).   The basis for these

determinations was informed by applicable State law provisions.

     Under Nebraska State law, the minimum educational

requirement to be licensed as a mental health practitioner was a

master’s degree.   Neb. Rev. Stat. Ann. sec. 38-2122.   However, to

be licensed as a psychologist an applicant was required to

possess a doctoral degree.   Neb. Rev. Stat. Ann. sec. 38-3114.

Mental health practice includes the provision of treatment,

assessment, psychotherapy, counseling, or equivalent activities

but specifically excludes the practice of psychology, diagnosis

of major mental illness or disorder without consultation with a

qualified physician or a licensed psychologist, measuring

personality or intelligence for the purpose of diagnosis or

treatment planning, and using psychotherapy to treat the
                                  - 9 -

psychological aspects of physical illness.      Neb. Rev. Stat. Ann.

sec. 38-2115.   The practice of psychology specifically includes

psychological testing and the evaluation or assessment of

personal characteristics such as intelligence and personality,

diagnosis and treatment of mental and emotional disorders and the

psychological aspects of physical illness, and supervision of

qualified individuals performing such services.     Neb. Rev. Stat.

Ann. sec. 38-3108.

     Similarly, New York State law requires, inter alia, a

doctoral degree in psychology to qualify for a license as a

psychologist.   N.Y. Educ. Law sec. 7603 (McKinney 2001).    The

practice of psychology includes psychological testing and

counseling, and diagnosis and treatment of mental illness and

disorders including the psychological aspects of physical

illness.   Id. sec. 7601-a (McKinney Supp. 2009).    Until January

2005 there was no equivalent to the Nebraska mental health

practitioner classification in New York.     See id. sec. 8402.

Beginning in January 2005, to be licensed as a mental health

counselor in New York an applicant must have attained at least a

master’s degree.     Id.   Therefore, at the time petitioner enrolled

in the internship in September 2003 she was only qualified to

provide services as a mental health practitioner in Nebraska and

not in New York.   Following the internship, she possessed the

requisite education necessary to apply for a license as a
                              - 10 -

psychologist in both New York and Nebraska.    Consequently, State

law provisions precluded petitioner from practicing psychology

until she completed her doctoral degree.

     Indeed, the self-proclaimed goal of the internship program

was to prepare interns for entry-level service as practicing

psychologists.   Even though petitioner was in the field of

psychology before and after the internship, the doctorate

fulfilled the statutory requirements for licensing as a

psychologist in both New York and Nebraska, met the minimum

qualifications for staff psychologist, and qualified her to

perform tasks and activities significantly different from those

she could perform before the education.    Thus, petitioner’s

education qualified her for a new trade or business.     As a

result, petitioner is not entitled to deduct the educational

expenses under section 162(a).

                            Conclusion

     We have considered all of the arguments made by petitioner,

and, to the extent that we have not specifically addressed them,

we conclude they are unpersuasive.

     To reflect the foregoing,


                                           Decision will be entered

                                     for respondent.
