                       T.C. Memo. 2003-68



                     UNITED STATES TAX COURT


                   PIETER WEYTS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 10054-01.                Filed March 12, 2003.


     Pieter Weyts, pro se.

     Diana P. Hinton, for respondent.


                       MEMORANDUM OPINION

     POWELL, Special Trial Judge:   Respondent determined a

deficiency of $4,270 in petitioner’s 2000 Federal income tax.

The issues are whether petitioner is (1) entitled to a deduction

under section 162 for educational expenses, (2) entitled to an

exemption under Article 21 of the Convention for the Avoidance of

Double Taxation, Oct. 13, 1972, U.S.-Belg., 23 U.S.T. (Part 3)

2687; (3) entitled to a charitable contribution deduction under

section 170, and (4) entitled to an education loan interest
                                - 2 -

deduction under section 221.1    Petitioner resided in New York,

New York, at the time the petition was filed.

                              Background

Educational Expenses and Article 21 Exemption

     Petitioner is a citizen of Belgium.     In June of 1997,

petitioner graduated from Katholieke Universiteit Leuven in

Belgium, where he earned a law degree.     After graduation and

until the following August, petitioner worked as a legal

assistant for his father, a Belgian attorney.     Petitioner was not

admitted to the Belgian bar.    In Belgium, a law school graduate

must work for 3 years as a “studiare” or apprentice before

qualifying for admission to the bar.

     In August of 1997, petitioner came to New York City to

attend Columbia University School of Law (Columbia).     In May of

1998, he was awarded a Master of Laws (LL.M.) in Corporate

Finance.   In July of 1998, petitioner sat for and passed the New

York State bar examination.

     Petitioner desired to work temporarily as an attorney in New

York City.   He was advised to obtain a J.D. degree to increase

his marketability in the competitive New York City legal

community.   Petitioner enrolled in the J.D. program at Columbia



     1
         Unless otherwise indicated, section references are to
the Internal Revenue Code in effect for the year in issue, and
Rule references are to the Tax Court Rules of Practice and
Procedure.
                                 - 3 -

in August of 1998.    Petitioner received 1 year of credit towards

his J.D. graduation requirements from his studies in the LL.M.

program which would have enabled him to graduate in May of 2000.

Petitioner, however, decided to enroll in a joint J.D./M.B.A.

program that extended his studies for 1 more year.

     During the summer of 1999, petitioner worked as a summer

associate for the law firm of Kelley Drye & Warren, LLP (Kelley

Drye).   In July of 1999, petitioner was formally inducted into

the New York State Bar.    The following summer, from approximately

May to August of 2000, petitioner was employed as a summer

associate at the law firm of Davis Polk & Wardwell (Davis Polk).

Petitioner received both monetary compensation from Davis Polk

and 3 hours of class credit.

     On his 2000 Federal income tax return, petitioner claimed a

Schedule A itemized deduction of $36,154 for educational

expenses.   Upon examination, respondent disallowed the deduction.

Charitable Contribution Deduction

     Sometime in 2000, petitioner paid $700 to attend a student

benefit to raise money for an informal organization to allegedly

aid minority student’s scholarships.     This amount entitled

petitioner to attend a benefit at which a dinner was served.

Petitioner did not attend the dinner.     On his 2000 return,

petitioner did not claim a charitable contribution deduction for

the amount paid.     Petitioner now claims that he is entitled to
                                 - 4 -

deduct $620 for the gift because $80 was attributable to services

rendered in the form of the dinner.

Deduction for Education Loan Interest

     Before he commenced his studies at Columbia, petitioner

allegedly borrowed money from a Dutch bank to finance his

educational expenses.     The loan was secured by the home of

petitioner’s parents, and his parents were guarantors on the

loan.     EURO 6,197 was paid as interest in 2000, and the parties

agree that the dollar conversion is $5,329.     Petitioner claims

that he is entitled to a deduction for education loan interest

under section 221.

                              Discussion

Section 162 Deduction for Educational Expenses

        “Expenditures made by a taxpayer in obtaining an education

or in furthering his education are not deductible unless they

qualify under section 162 and § 1.162-5”.     Sec. 1.262-1(b)(9),

Income Tax Regs.; see also Boser v. Commissioner, 77 T.C. 1124,

1132 (1981).     Section 162(a) limits deductions for all “ordinary

and necessary expenses” to those incurred “carrying on any trade

or business”.     The determination of whether a taxpayer is engaged

in a trade or business “requires an examination of the facts in

each case.”     Higgins v. Commissioner, 312 U.S. 212, 217 (1941).

“[T]o be engaged in a trade or business, the taxpayer must be

involved in the activity with continuity and regularity and that
                                - 5 -

the taxpayer’s primary purpose for engaging in the activity must

be for income or profit.”    Commissioner v. Groetzinger, 480 U.S.

23, 35 (1987).   Moreover, to qualify for the deduction, the

taxpayer must be established in the trade or business at the time

the educational expenses are incurred.    Jungreis v. Commissioner,

55 T.C. 581, 588 (1970).

      The issue before the Court is whether petitioner was in a

trade or business of practicing law during 2000.   Admission to

the bar is not tantamount to being engaged in a trade or business

of practicing law.    Wassenaar v. Commissioner, 72 T.C. 1195,

1199-1200 (1979).    And, a law clerk who is employed in private

practice while attending law school and before admission to a bar

is not engaged in a trade or business of practicing law.    See

Johnston v. Commissioner, T.C. Memo. 1978-257.

      Petitioner relies on Ruehmann v. Commissioner, T.C. Memo.

1971-157.   In Ruehmann, the Court held that the taxpayer’s

expenses to obtain an LL.M. were deductible under section 162.

Id.   The taxpayer passed the State bar exam in his second year of

law school.   After graduation, the taxpayer worked in a law firm

for a short time before starting his LL.M. studies.    At the law

firm, the taxpayer “was employed as a lawyer, paid the same

salary as other beginning lawyers who were members of the Bar,

and assigned the same type of work that other lawyers of

comparable experience in the * * * Firm were assigned.”    Id.
                                - 6 -

     Petitioner argues that he was similarly situated.    He was a

member of the New York State Bar while employed at Kelley Drye

and at Davis Polk as a summer associate.    With respect to his

work at Davis Polk, however, petitioner earned 3 hours of class

credit towards his J.D./M.B.A. degrees for his work at Davis

Polk.   Furthermore, the arrangement of being a summer associate

is more indicative of an educational pursuit, rather than being

engaged in a trade or business of practicing law.    The title is

also more indicative of being a law clerk.    Indeed, petitioner

testified: “I have always been a full-time student from 1997

through 2001”, and he maintained a student visa throughout this

period.    Petitioner also failed to establish that his

compensation and assignments were similar to other full-time

associates at Kelley Drye and/or Davis Polk.

     In sum, we believe that petitioner had an “uninterrupted

continuity in his legal education.”     Wassenaar v. Commissioner,

supra at 1199; see also Link v. Commissioner, 90 T.C. 460 (1988),

affd. without published opinion 869 F.2d 1491 (6th Cir. 1989);

Baker v. Commissioner, 51 T.C. 243, 247 (1968).     Between 1997 and

2001, petitioner was a full-time student and earned three law

degrees.    Petitioner enrolled in each degree program immediately

after completion of the preceding one.    Petitioner was not

engaged in a trade or business of being a practicing attorney.

     Having decided that petitioner does not satisfy the
                                 - 7 -

requirements of section 162, we need not decide whether

petitioner satisfies the requirements of section 1.162-5, Income

Tax Regs.    Accordingly, petitioner is not entitled to a deduction

for his educational expenses.

United States-Belgium Income Tax Convention Article 21 Exemption

     Article 21 of the Convention for the Avoidance of Double

Taxation, Oct. 13, 1972, U.S.-Belg., 23 U.S.T. (Part 3) 2687,

2704, provides:

     ARTICLE 21.    STUDENTS AND TRAINEES

          (1)(a) An individual who is a resident of one of the
     Contracting States at the time he becomes temporarily
     present in the other Contracting State and who is
     temporarily present in that other Contracting State for the
     primary purpose of:

          (i) Studying at a university or other recognized
     educational institution in that other Contracting State

            *      *        *      *        *     *       *

     shall be exempt from tax by that other Contracting State
     with respect to amounts described in subparagraph (b) for a
     period not exceeding 5 taxable years from the date of his
     arrival in that other Contracting State.

            (b)   The amounts referred to in subparagraph (a) are:

            *      *        *      *        *     *       *

          (iii) Income from personal services performed in that
     other Contracting State in an amount not in excess of 2,000
     United States dollars * * *.

     Respondent argues that petitioner is a resident of the

United States and thus may not claim the Article 21 exemption

because he was not “temporarily present” in the United States
                               - 8 -

with the primary purpose to pursue a course of study.

     To determine residency, an alien individual is a resident of

the United States for Federal income tax purposes if the

individual meets the “substantial presence test”.    Sec.

7701(b)(1)(A)(ii).   “[A]n individual meets the substantial

presence test * * * if--(i) such individual was present in the

United States on at least 31 days during the calendar year, and”

applying a mathematical formula, was present during the current

year and the preceding 2 years for 183 days or more.    Sec.

7701(b)(3)(A).

     However, an individual is not treated as being in the United

States if the “individual is an exempt individual for such day”.

Sec. 7701(b)(3)(D)(i).   An exempt individual is, inter alia, “a

student”.   Sec. 7701(b)(5)(A)(iii).   A student is an individual

“who is temporarily present in the United States–-(I) under

subparagraph (F) or (M) of section 101(15) of the Immigration and

Nationality Act” and “who substantially complies with the

requirements for being so present.”    Sec. 7701(b)(5)(D)(i) and

(ii).

     During the year 2000, petitioner was present in the United

States under subparagraph (F) of section 101(15) of the

Immigration and Nationality Act, 8 U.S.C. sec. 1101(a)(15)(F)(i)

(2003), commonly referred to as an (F)(1) visa.    Thus, petitioner

was a “student” during 2000, and was not considered to be a
                                 - 9 -

resident of the United States for Federal income tax purposes.

Petitioner was present in the United States with the primary

purpose of studying at a university.     Accordingly, we find that

petitioner is entitled to the Article 21 exemption.

Section 170 Charitable Contribution Deduction

     Section 170(a) provides a “deduction [for] any charitable

contribution” made to a qualified donee under section 170(c).

Section 170(f) provides recordkeeping requirements for certain

charitable contributions.   Any charitable contribution of $250 or

more will be disallowed “unless the taxpayer substantiates the

contribution by a contemporaneous written acknowledgment”

prepared by the donee.   Sec. 170(f)(8)(A).   The written

acknowledgment must include (1) the amount of cash contributed,

(2) whether the donee organization provided any goods or services

in consideration of the donation, and (3) a description and good

faith estimate of the value of those goods or services.     Sec.

170(f)(8)(B).   A written acknowledgment is contemporaneous if the

taxpayer obtains the statement

     on or before the earlier of--

               (i) the date on which the taxpayer files a return
          for the taxable year in which the contribution was
          made, or

               (ii) the due date (including extensions) for
          filing such return. [Sec. 170(f)(8)(C).]

     Petitioner does not have a contemporaneous written

acknowledgment from the donee to substantiate the contribution.
                                - 10 -

Petitioner argues, however, that we should apply the rule in

Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), to allow the

deduction.    The Cohan rule is invoked in situations where

“Absolute certainty * * * is usually impossible and is not

necessary” and where a close approximation can be made “bearing

heavily * * * upon the taxpayer whose inexactitude is of his own

making.”     Id. at 543-544.

         We find the application of the Cohan rule to be

inappropriate in this case.    Section 170(f) was added by the

Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, sec.

13172, 107 Stat. 312.    The House of Representatives proposed to

enact section 170(f) due to

          Difficult problems of tax administration [that] arise
     with respect to fundraising techniques in which an
     organization that is eligible to receive tax deductible
     contributions provides goods or services in consideration
     for payments from donors. * * * the committee believes that
     there will be increased compliance with present-law rules
     governing charitable contribution deductions if a taxpayer
     who claims a separate charitable contribution of $750[2] or
     more is required to obtain substantiation from the donee
     indicating the amount of the contribution and whether any
     goods, service, or privilege was received by the donor in
     exchange for making the contribution. * * * [H. Rept. 103-
     111, 1993-3 C.B. 167, 361.]

     To allow petitioner the charitable contribution deduction in

the circumstances here would contravene the specific statutory



     2
        The Senate amendment proposed to change the threshold
amount to $250. H. Conf. Rept. 103-213 (1993), 1993-3 C.B. 393,
443. The Senate version was later adopted in conference. H.
Conf. Rept. 103-213, at 445, supra, 1993-3 C.B. at 361.
                               - 11 -

language and purpose of recordkeeping for contributions in excess

of $250.    We find that petitioner is not entitled to a charitable

contribution deduction.

Education Loan Interest Deduction Under Section 221

     Deductions are a matter of legislative grace, and the

taxpayer bears the burden of proving the entitlement to any

deduction claimed.    See Rule 142(a); INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992).    A taxpayer is required to

maintain records sufficient to establish the amount of his or her

income and deductions.    Sec. 6001; sec. 1.6001-1(a), (e), Income

Tax Regs.

     Section 221(a) provides that a deduction is allowed for an

amount equal “to the interest paid by the taxpayer * * * on any

qualified education loan.”   Section 221(d) defines a “qualified

education loan” as “any    indebtedness incurred by the taxpayer

solely to pay qualified higher education expenses”.

     The only documentary evidence concerning the alleged

educational loan is a letter from the Cooperative Rabobank West-

Zeeuws-Vlaanderen U.A. addressed to P.A.E.L. Weyts (we assume

petitioner) in Brugge, Belgium, stating that the interest paid on

the “mortgage loan” in 2000 was EURO 6,197.28 and that the

balance of the loan as of January 1, 2001, was EURO 123,946.28.

The record does not include the loan agreement or any documentary

evidence of when and how, if at all, petitioner paid the
                              - 12 -

interest.   This is particularly troublesome because these are the

type of records that would be readily available to petitioner,

and petitioner’s failure to provide these records leads to the

inference that they would not be favorable to petitioner’s case.

Additionally, we are bothered by the fact that the loan was

secured by a mortgage on his parents’ residence.    Finally, given

petitioner’s expenses at Columbia, it is unclear from what source

of funds petitioner made any interest payments.     The inferences

suggest that petitioner may not have incurred or been legally

responsible for the loan.   Accordingly, we find that petitioner

did not meet his burden of proof3 and is not entitled to an

education loan interest deduction under section 221.

     To reflect the foregoing,

                                      Decision will be entered

                                 under Rule 155.




     3
        Sec. 7491(a)(1) provides that the burden of proof shall
be on respondent in certain situations. This provision does not
apply if the taxpayer has not maintained required records. Sec.
7491(a)(2). In the circumstances here, at a minimum, a taxpayer
claiming an interest expense would be required to maintain the
basic debt instrument.
