                       T.C. Memo. 1996-300



                     UNITED STATES TAX COURT



                THEODORE W. KELLER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 1284-95.                       Filed June 27, 1996.


     Theodore W. Keller, pro se.

     Jeremy L. McPherson, for respondent.


                       MEMORANDUM OPINION


     COUVILLION, Special Trial Judge:   This case was heard

pursuant to section 7443A(b)(3)1 and Rules 180, 181, and 182.

     Respondent determined a deficiency of $2,996 in petitioner's

Federal income tax and an accuracy-related penalty under section

1
     When the petition was filed, petitioner elected to have this
case considered pursuant to sec. 7463(a) as a small tax case.
Prior to trial, petitioner requested that the case be considered
pursuant to sec. 7443A(b)(3). The Court granted petitioner's
request. Unless otherwise indicated, section references are to
the Internal Revenue Code in effect for the year at issue. All
Rule references are to the Tax Court Rules of Practice and
Procedure.
                               - 2 -


6662(a) in the amount of $599 with respect to petitioner's 1991

tax year.

     The issues for decision are:   (1) Whether certain

educational expenses incurred by petitioner constitute

nondeductible travel expenses for education under section

274(m)(2), and (2) whether petitioner is liable for the accuracy-

related penalty under section 6662(a).

     Some of the facts were stipulated.   Those facts, with the

annexed exhibits, are so found and are incorporated herein by

reference.   At the time the petition was filed, petitioner's

legal residence was in the State of California.

     During the year at issue, petitioner was employed as a

professor of international relations by San Francisco State

University at San Francisco, California (the University).    The

department of international relations at the University is part

of the School of Behavioral and Social Sciences.   Petitioner

began his employment with the University in the fall of 1964,

having a bachelor of arts degree in psychology and master and

doctorate degrees in political science.   After the year at issue,

petitioner retired in October 1992 as professor emeritus.

     As petitioner described it at trial, the academic field of

international relations mainly involves international politics

and encompasses social, economic, political, and cultural

relations among nations.   As a professor of international
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relations, petitioner was interested in and focused on the theory

of international politics, such as what makes nations do what

they do, why nations take such positions, and theories of

revolution, counterrevolution, and war.   Approximately every 7

years, professors at the University in this field of academics

were expected, although not required, to travel to a foreign

country to learn more about their field of study.   Petitioner

took two such trips, both to France, during the 1976-77 and the

1983-84 academic years.   The third trip he took, to Spain, during

the 1990-91 academic year, gives rise to this litigation.

     Sometime during 1990, petitioner applied with the University

for a "Difference In Pay" leave for the 1990-91 academic year,

which was approved.    At trial, the parties referred to the leave

as a sabbatical leave.    During this leave period, petitioner was

paid one-half his regular salary.   Between August 1990 and until

July 25, 1991, petitioner was in Madrid, Spain, except for 2

weeks at Christmas during 1990 and 4 days in the spring of 1991.

     In his application for the sabbatical, petitioner was

required to briefly describe what activity he proposed to engage

in during his leave.    Petitioner stated on his application that

he would focus on the "post-industrial era" and "write a book-

length * * * essay on this subject, exploring how and why post-

industrial society's socio-economic political consciousness will

differ from our own".    He stated further in his application that
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approximately half of his research for the proposed manuscript

was already completed, and he continued:


     Partly for economic reasons, partly to get a change of pace,
     I intend to go abroad to do the writing. My last sabbatical
     was spent in Paris and I managed to take an hour a day of
     conversational French as well as write MARX'S TRUTH AND ITS
     CONSEQUENCES. I am considering going to Spain this time and
     attempting to learn a bit of Spanish.


     The manuscript referred to was initially begun by petitioner

on one of his earlier sabbaticals in France.      For the planned

sabbatical, petitioner testified at trial "my intention was to go

to Spain and to talk to other people in Spain from elsewhere in

Europe about that subject".    After arriving in Spain in August

1990, petitioner resumed work on the manuscript and completed a

draft that he sent to another professor at the University, who at

one time was chairman of the international relations department,

Dr. Henry E. McGuckin, Jr.    Dr. McGuckin reviewed the draft

manuscript and advised petitioner:      "It has a lot of great

arguments, but it's much too theoretical.      I think you'll turn a

lot of people off with this."    Apparently heeding Dr. McGuckin's

advice, petitioner did no further work on the manuscript and

decided to focus his attention on something else.      At that time,

the military involvement of the United States in the area of the

Persian Gulf was just beginning, occasioned by the invasion of

Kuwait by Iraq.   Petitioner decided that he would redirect his

efforts to a study of the Persian Gulf situation primarily from
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the European perspective as viewed from Spain.   As petitioner

envisioned the situation, the European perspective was that the

United States had "set up" Iraq through its leader, Saddam

Hussein, to attack Kuwait, after which the United States would

thereby be justified in proceeding with military action, which

would result in the United States solidifying control of the

Persian Gulf and the attendant oil resources of that area of the

world.   The remainder of petitioner's sabbatical leave,

therefore, was devoted to this subject and resulted in

petitioner's writing a five-act play dealing with the Persian

Gulf situation.   Petitioner returned to the United States on July

25, 1991, and resumed his professorship at the University upon

conclusion of his sabbatical leave.    The five-act play, which he

wrote while in Spain, was published and was utilized by

petitioner in his international relations courses at the

University.

     On his Federal income tax return for 1991, petitioner

claimed on Schedule A, Itemized Deductions, a deduction of

$13,505 for job expenses and other miscellaneous deductions.

This amount included the following expenses attributable to

petitioner's travel to Spain during 1991, related to his

sabbatical leave:
                                 - 6 -



     $     202   Vehicle expenses
            48   Parking fees
         7,610   Sabbatical expenses:
                      $ 791 Air, bus, etc.
                         593 Shipping, passports
                         254 Local transportation
                       4,486 Lodging
                       1,318 Utilities
                         168 Utilities
       2,874     Meals (80 percent of actual amount)
     $10,734     Total (prior to deduction of 2 percent of adjusted
                        gross income under sec. 67(a))


     In the notice of deficiency, respondent disallowed the

$10,734 on the ground that "no deduction is allowed for costs of

travel that constitutes a form of education".    At trial,

respondent agreed that petitioner had incurred the amounts

claimed but contended that such expenses were not allowable

deductions under section 274(m)(2).

     Deductions are strictly a matter of legislative grace, and

the taxpayer bears the burden of proving entitlement to any

deductions claimed.     Rule 142(a); New Colonial Ice Co. v.

Helvering, 292 U.S. 435, 440 (1934); Welch v. Helvering, 290 U.S.

111 (1933).

     Section 162(a) permits a deduction for all ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on a trade or business.     Such expenses generally include

expenditures for travel while away from home in the pursuit of a

trade or business.     The word "travel" includes meals and lodging.

Sec. 162(a)(2).
                               - 7 -


     Prior to 1987, section 1.162-5(d), Income Tax Regs.,

specifically provided that an individual traveling away from home

primarily for educational purposes could properly deduct

expenditures for travel, including meals, and lodging under

section 162.   However, in the Tax Reform Act of 1986, Pub. L. 99-

514, 100 Stat. 2118, section 142(b) of that act expressly

overruled section 1.162-5(d), Income Tax Regs.   In particular,

section 142(b) of the Tax Reform Act of 1986 added section

274(m)(2) and provides that "No deduction shall be allowed under

this chapter for expenses for travel as a form of education."

Section 274(m)(2) is effective for tax years after 1986.

     No regulations have been promulgated with respect to section

274(m)(2).   However, the legislative history of this provision

gives significant insight as to the intent of Congress in

enacting section 274(m)(2).   In H. Conf. Rept. 99-841, (Vol. 2)

at II-30 (1986), 1986-3 C.B. (Vol. 4) 1, 30, the explanation for

this legislation is as follows:


          Educational travel.--No deduction is allowed for costs
     of travel that would be deductible only on the ground that
     the travel itself constitutes a form of education (e.g.,
     where a teacher of French travels to France to maintain
     general familiarity with the French language and culture, or
     where a social studies teacher travels to another State to
     learn about or photograph its people, customs, geography,
     etc.). This provision overrules Treas. Reg. sec. 1.162-5(d)
     to the extent that such regulation allows deductions for
     travel as a form of education.
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     In H. Rept. 99-426 (1985), 1986-3 C.B. (Vol. 2) 1, 122, the

Committee on Ways and Means of the House of Representatives

reported:


     Travel as a form of education

          The committee is concerned about deductions claimed for
     travel as a form of "education." The committee believes
     that any business purpose served by traveling for general
     educational purposes, in the absence of a specific need such
     as engaging in research which can only be performed at a
     particular facility, is at most indirect and insubstantial.
     By contrast, travel as a form of education may provide
     substantial personal benefits by permitting some individuals
     in particular professions to deduct the cost of a vacation,
     while most individuals must pay for vacation trips out of
     after-tax dollars, no matter how educationally stimulating
     the travel may be. Accordingly, the committee bill
     disallows deductions for travel that can be claimed only on
     the ground that the travel itself is "educational", but
     permits deductions for travel that is a necessary adjunct to
     engaging in an activity that gives rise to a business
     deduction relating to education.


     Petitioner argues that the work he performed in Spain could

not have been performed in the United States and necessarily

required foreign travel because the European perspective of the

Persian Gulf war was not made known or publicized by the news

media in the United States.   That argument, however, is

misdirected because petitioner did not apply for a sabbatical

leave in order to make a study of the Persian Gulf war.

Petitioner's intent and purpose in taking the sabbatical and in

traveling to Spain was to complete a manuscript on an unrelated

subject he had begun several years before.   The University did
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not require that petitioner travel to Europe or anywhere else as

a condition of the sabbatical.    It was only as an afterthought,

after petitioner arrived in Spain, that he changed his mind from

completion of the manuscript on an unrelated subject to a study

of the Persian Gulf war from the European point of view.    Under

either situation, whether petitioner desired to complete a

manuscript, or to study the European view of the Persian Gulf

war, the travel involved would appear to lie within the examples

of travel described in the legislative history of section

274(m)(2) quoted above of the teacher of French, who travels to

France to maintain general familiarity with the French language

and culture, or the social studies teacher who travels to another

State to learn about or photograph its people, customs,

geography, etc.   Here, petitioner's express purpose, after

arriving in Spain, was to learn the European perspective of the

Persian Gulf war.   Petitioner's situation falls squarely within

the type of travel Congress intended in enacting section

274(m)(2) in disallowing expenses relating to travel as a form of

education.   On this record, petitioner has not established that

the deductions claimed were a necessary adjunct to engagement in

an activity giving rise to a business deduction relating to

education that Congress intended to remain as an allowable

deduction.   Respondent, therefore, is sustained on this issue.
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     The remaining issue is whether petitioner is liable for the

accuracy-related penalty under section 6662(a) for negligence

under section 6662(c).   Generally, this penalty is applicable to

any underpayment of tax attributable to negligence or disregard

of rules or regulations.    Section 6662(c) provides that the term

"negligence" includes any failure to make a reasonable attempt to

comply with the provisions of this title, and the term

"disregard" includes any careless, reckless, or intentional

disregard.    Negligence has also been defined as lack of due care

or failure to do what a reasonable and ordinarily prudent person

would do under like circumstances.      Neely v. Commissioner, 85

T.C. 934 (1985).    However, under section 6664(c), the penalty

under section 6662(a) shall not be imposed with respect to any

portion of an underpayment if it is shown that there was

reasonable cause for the underpayment, and the taxpayer acted in

good faith.    Petitioner is sustained on this issue.    The Court is

satisfied that petitioner acted in good faith in claiming the

disputed travel expenses for 1991.      There were no regulations

that had been promulgated to reflect the intent of Congress in

the enactment of section 274(m)(2) and to particularize those

travel expenses relating to education that were not affected by

section 274(m)(2).    For the year in question, therefore, there

was no clear-cut guide by which taxpayers, such as petitioner,

could have ascertained whether the travel expenses incurred were
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nondeductible education travel expenses or otherwise were

allowable education expenses.



                                Decision will be entered for

                         respondent for the deficiency in tax

                         and for petitioner as to the section

                         6662(a) accuracy-related penalty.
