                         T.C. Memo. 1995-530



                       UNITED STATES TAX COURT



                   THOMAS D. STRICKER, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12670-79.         Filed November 8, 1995.



     Thomas D. Stricker, pro se.

     Mark A. Weiner, for respondent.



               MEMORANDUM FINDINGS OF FACT AND OPINION

     COHEN, Judge:    Respondent determined a deficiency in the

amount of $2,754 in petitioner's Federal income tax for 1976.

Unless otherwise indicated, all section references are to the

Internal Revenue Code in effect for the year in issue, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

     After concessions by both parties, we must decide the

following issues:    (1) Whether petitioner is entitled to a

deduction for legal expenses; (2) whether petitioner is entitled

to a deduction for rent expenses greater than that allowed by

respondent; and (3) whether petitioner is entitled to a deduction
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for the cost of a sales course, as well as for other expenses

associated with the course.

                          FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.     At the

time the petition was filed, petitioner resided in Sacramento,

California.

     In 1974, while petitioner was driving his truck in the

conduct of his business, his truck was struck by a California

Highway Patrol (CHP) car.    Petitioner sought advice from an

attorney about the possibility of filing a personal injury suit

against the CHP.    Petitioner wanted to seek monetary damages for

injuries he received from the accident.      After determining that

the possibility of recovery of damages was slight, petitioner did

not pursue the action any further.      Petitioner incurred expenses

of $384 for the attorney's services.     Petitioner deducted these

legal expenses on his 1976 Federal income tax return.     Respondent

disallowed this deduction.

     During 1976, petitioner began his own business selling meat

and seafood.   Petitioner rented a house located at Bridgeford

Drive in Sacramento, California (the Bridgeford property), to use

for his business.   Petitioner used the Bridgeford Drive address

for his personal and business checking accounts.     On his 1976

return, petitioner deducted as a business expense 100 percent of
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the rent he paid on the Bridgeford property.    Respondent

disallowed 60 percent of this deduction.

     The Bridgeford property was a house containing three

bedrooms, two bathrooms, a family room/dining room, and a

kitchen.    Petitioner placed freezers, where he stored his food

products, in the garage.    Petitioner used only one or two rooms

of the house, in addition to the garage, for business purposes.

     Petitioner traveled on business Monday through Friday.

Petitioner stayed overnight at the Bridgeford Drive property and

cooked meals there.

     Petitioner enrolled in the Big League Sales Course in late

1976.   The course was offered exclusively to Scientologists

through the Church of Scientology and took place on church-owned

property in Florida.    The course was not offered in any other

location.

     While in Florida, petitioner's accommodations were in the

Fort Harrison Hotel, which the Church of Scientology owned.

After approximately 20 days, petitioner completed the course and

received a certificate designating him a "Hubbard Professional

Service Consultant".

     The course required petitioner to read assigned portions of

a 193-page book by Les Dane (Dane) entitled "Big League Sales

Closing Techniques".    Petitioner had purchased and read the book

in its entirety in 1974 and read it again in relation to the

course taken in 1976.    The Big League Sales Course also used
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Church of Scientology scriptures on consulting in addition to the

Dane book.

     As part of his course of study, petitioner was to practice

the sales techniques from his reading on other students.      Because

petitioner was the only person enrolled in the sales course at

the time, however, this was not possible.

     After petitioner finished a reading assignment, a

supervisor, who oversaw several of the Scientology course

offerings, would "examine" petitioner about the portion of the

book he had read.    This examination consisted of petitioner's

attesting to the completion of the materials.      The supervisor

would ask:    "Can you apply those materials?"    Petitioner would

respond:    "Yes, I can apply those materials."

     During 1976, petitioner was enrolled in other Church of

Scientology courses.    The other courses, however, related solely

to spiritual counseling.

     On his 1976 Federal income tax return, petitioner deducted

the $948 course fee and $1,366 in additional money spent on

travel, accommodations, and other expenses relating to the

course.    Respondent disallowed the deduction.

                               OPINION

     Petitioner bears the burden of establishing that he is

entitled to the claimed deductions.      Rule 142(a); INDOPCO, Inc.

v. Commissioner, 503 U.S. 79, 84 (1992); Rockwell v.
                               - 5 -

Commissioner, 512 F.2d 882, 886 (9th Cir. 1975), affg. T.C. Memo.

1972-133.

Legal Expense

     Petitioner argues that legal expenses incurred to

investigate the possibility of a personal injury claim against

the CHP are deductible business expenses because the accident

giving rise to the possible personal injury claim occurred while

petitioner was engaged in business activities.    Respondent

asserts that the legal expenses are personal in nature and not

deductible pursuant to section 262.    We agree with respondent.

     This case is indistinguishable from our decision in Murphy

v. Commissioner, 48 T.C. 569, 570 (1967), in which we said:

          Congress has seen fit to regard an individual as
     having two personalities: one as a seeker of profit
     who can deduct the expenses incurred in that search,
     the other as a creature satisfying his needs as a human
     and those of his family but who cannot deduct the
     expenditures incurred in such satisfaction.

See United States v. Gilmore, 372 U.S. 39, 44 (1963).    Petitioner

possessed both personalities at the time of his accident.      While

it is true that petitioner was a profit seeker at the time of the

accident, the damages that petitioner sought were not "profits"

in the sense of compensation for his business efforts.    Murphy v.

Commissioner, supra at 570.   Rather, as payments solely for

personal injuries, the damages petitioner sought were designed to

indemnify him for bodily impairment that he suffered.    Id.

Because the legal expenses were not incurred in the carrying on
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of a trade or business, the expenditures are nondeductible

personal expenses.

Home Office Expense

     Petitioner used the Bridgeford property as the principal

place of business for his meat and seafood sales.    Respondent

thus allowed petitioner to deduct 40 percent of the rent expense

on the Bridgeford property.   Petitioner argues that 100 percent

of the rental expense should be allowed as a deduction.

     Section 280A establishes the general rule that no deduction

is allowed with respect to business use of a taxpayer's personal

residence.   Section 280A(c)(1)(A), however, provides that section

280A shall not apply if a portion of the taxpayer's personal

residence is exclusively used on a regular basis as the principal

place of business for any trade or business of the taxpayer.      See

Sam Goldberger, Inc. v. Commissioner, 88 T.C. 1532, 1556-1557

(1987).

     The evidence presented by petitioner, consisting of

photographs of the Bridgeford property along with petitioner's

testimony, fails to establish that petitioner used more than

40 percent of the Bridgeford property exclusively for business

purposes.    The legislative history of section 280A dealing with

exclusive use explains:

          Exclusive use of a portion of a taxpayer's
     dwelling unit means that the taxpayer must use a
     specific part of a dwelling unit solely for the purpose
     of carrying on his trade or business. The use of a
     portion of a dwelling unit for both personal purposes
                                - 7 -

     and for the carrying on of a trade or business does not
     meet the exclusive use test. Thus, for example, a
     taxpayer who uses a den in his dwelling unit to write
     legal briefs, prepare tax returns, or engage in similar
     activities as well as for personal purposes, will be
     denied a deduction for the expenses paid or incurred in
     connection with the use of the residence which are
     allocable to these activities. * * * [S. Rept. 94-
     938, at 148 (1976), 1976-3 C.B. (Vol. 3) 186; H. Rept.
     94-658, at 161 (1975), 1976-3 C.B. (Vol. 2) 853.]

     The majority of the photographs of the Bridgeford property

introduced by petitioner depict the exterior of the house.        The

interior photographs show the garage (where petitioner kept his

inventory in freezers), a hallway with an office chair, and two

rooms containing office furniture.      At least one bedroom, the

family room/dining room, and the kitchen are not shown in these

photographs.    Petitioner's testimony at trial indicated that he

used the kitchen to cook his meals, and it appears that he stayed

overnight at the Bridgeford property.

     This evidence is not sufficient to show that 100 percent of

the rental expense of the Bridgeford property is deductible.

Certain areas of the house were not used exclusively for business

purposes.   Still, other areas have not been shown to have been

used for business purposes at all.      Therefore, respondent's

determination that petitioner cannot deduct the remaining

60 percent of the rental expense of the Bridgeford property will

be sustained.

Education Expense
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     Petitioner asserts that the cost of the Big League Sales

Course and associated expenditures were deductible as ordinary

and necessary business expenses pursuant to section 162.

Respondent contends that the course cost and the associated

expenses were personal expenses and not ordinary and necessary

business expenses and, therefore, were not deductible pursuant to

section 262.

     Section 162 allows a deduction for "all the ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on any trade or business".    Certain expenditures made by

an individual for education are deductible as ordinary and

necessary business expenses if the expenditure:

          (1) Maintains or improves skills required by the
     individual in his employment or other trade or
     business, or

          (2) Meets the express requirements of the
     individual's employer, or other requirements of
     applicable law or regulations, imposed as a condition
     to the retention by the individual of an established
     employment relationship, status, or rate of
     compensation. [Sec. 1.162-5(a), Income Tax Regs.]

Petitioner's participation in a sales course may have maintained

or improved the skills required of him in his occupation as a

salesman.   The expenditure for such coursework, however, must

still be ordinary and necessary in order to be deductible.    Sec.

162(a).

     "Ordinary" has been defined as that which is "normal, usual,

or customary" in the taxpayer's particular trade or business.
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Deputy v. du Pont, 308 U.S. 488, 495 (1940).    The expense need

not be one common for the particular taxpayer but, instead, be

one that is not rare in the taxpayer's business.    See Welch v.

Helvering, 290 U.S. 111, 114 (1933).   Enrolling in a sales course

to improve sales skills is a "normal" expenditure for a salesman.

In this instance, however, petitioner left his home and his

business for over 20 days to attend a sales course that consisted

of his reading a 193-page book.   The lack of intensity in study,

coupled with the length of time away from his business, is

certainly not ordinary in the sale of meat and seafood.

     "Necessary" has been construed to mean "appropriate" or

"helpful", not "indispensable" or "required".     Ford v.

Commissioner, 56 T.C. 1300, 1306 (1971), affd. 487 F.2d 1025 (9th

Cir. 1973).   It is sufficient if "there are also reasonably

evident business ends to be served, and the intention to serve

them appears adequately from the record."    B. Manischewitz Co. v.

Commissioner, 10 T.C. 1139, 1145 (1948).    Sales training is an

"appropriate" expenditure for a salesman.   From the record, we

conclude that petitioner had an intention to serve his business

when he participated in the Big League Sales Course.    Inherent in

the concept of "necessary", however, is that an expenditure must

be reasonable in relation to its purpose.   To the extent that an

expenditure is not reasonable, it is not necessary.    An

expenditure may be, by its nature, ordinary and necessary, but at

the same time it may be unreasonable in amount.     United States v.
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Haskel Engineering & Supply Co., 380 F.2d 786, 788 (9th Cir.

1967).   The focus must be, therefore, on the primary purpose of

the expenditure as it may be inferred from the totality of the

facts concerning the benefits to be achieved, the direct

relationship of those benefits to petitioner's business, and the

reasonableness of the expenses.     Love Box Co. v. Commissioner,

T.C. Memo. 1985-13, affd. 842 F.2d 1213 (10th Cir. 1988).

     Whether an expenditure is reasonable is a question of fact.

Commissioner v. Heininger, 320 U.S. 467, 475 (1943); Voigt v.

Commissioner, 74 T.C. 82, 89 (1980).    In this case, petitioner

deducted over $2,300 in expenses relating to his participation in

the Big League Sales Course.   The Big League Sales Course, while

promoted as a sales training course, involved little more than

petitioner's reading Dane's book.    Although petitioner stated

that the "course" was not offered at any other location, it is

difficult to believe that petitioner could not have received the

same training from reading the Dane book in the comfort of his

home.    The "examinations" by the course supervisor did nothing to

reinforce petitioner's learning.    Furthermore, the location of

the course on Church of Scientology property, the restriction of

participation to Scientologists alone, and the apparent use of

Scientology scriptures as part of the "course" indicate that the

pervasive purpose of this course was not that of improving

petitioner's sales skills.   The course cost and expenditures

associated with the course are not reasonable in light of the
                              - 11 -

benefits to petitioner's business and, therefore, are not

necessary.   Respondent's determination that the course fee and

associated expenses are not deductible will be sustained.

     To reflect the foregoing and concessions of the parties,


                                         Decision will be entered

                                    under Rule 155.
