Edwin F. Krist and Marion R. Krist, Appellees, v. Commissioner of Internal Revenue, Appellant, 483 F.2d 1345 (2d Cir. 1973)

This appeal from the Tax Court presents the single question whether a first grade teacher's sabbatical travel expenses abroad were deductible as "ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business," within the meaning of Sec. 162(a) of the Internal Revenue Code of 1954. We hold that they were not.

Section 162(a)¹  provides that a deduction shall be allowed for "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business." To the extent education and travel expenses fall into this category, a deduction is permitted. Treas.Reg. Sec. 1.162-5 (1967).²  Rev.Rul. 64-176, 1964-1 Cum.Bull. 87.

Treasury Regulations Sec. 1.162-5, first promulgated in 1958, provided that to deduct the expenses of travel while on sabbatical leave, a taxpayer had to establish that (1) the primary purpose of the travel was to maintain or improve employment skills, and (2) the travel had a direct relationship to the conduct of the individual's trade or business. The old regulations treated sabbatical leave travel "as primarily personal in nature and therefore not deductible." Treas.Reg. Sec. 1.162-5(c) (1958). These were liberalized by the Commissioner, however, to permit deduction for sabbatical leave travel even of the "broadening, cultural type" provided it "has a direct relationship to the conduct of the individual's trade or business." See Rev. Rul. 64-176, 1964-1 Cum.Bull. 87. In 1967 the Regulations themselves were revised, effective after January 1, 1968, and the subjective "primary purpose" test was eliminated. The amended Regulations require only that the travel have a direct relationship with the taxpayer's employment or other trade or business. Treas.Reg. Sec. 1.162-5(d) (1967). Cf. Carroll v. Commissioner, 418 F.2d 91, 94 (7th Cir. 1969); Furner v. Commissioner, 393 F.2d 292, 293 (7th Cir. 1968). For the taxable year here in question the taxpayer may utilize the somewhat more liberal 1967 Regulations, which apply retroactively even though they were not effective until 1968. Rev. Rul. 68-191, 1968-1 Cum.Bull. 67; Furner v. Commissioner, supra; Stanley Marlin, 54 T.C. 560, 563-565 (1970); Burke W. Bradley, Jr., 54 T.C. 216, 219 (1970).

Thus the sole question in this case is whether and to what extent Mrs. Krist's sabbatical trip bore a direct and specific relationship to her skills as a teacher. Expenses which relate primarily to a taxpayer's self-improvement, rather than improvement of employment skills, are not deductible. Carroll v. Commissioner, supra, 418 F.2d at 95. Even as thus liberalized, the regulations place a substantial burden on the taxpayer to demonstrate that the travel provided direct and specific training helpful in the taxpayer's job. The Tax Court below held that "the petitioner's primary purpose in taking the trip was to maintain or improve her skills and that the majority of her activities were directly related to her teaching job."

The appellee, Mrs. Marion R. Krist, is an elementary school teacher. In 1967 and for seven years prior to that date she taught the first grade of the Barnum Woods School in the East Meadow District of Long Island. Mrs. Krist was a general classroom teacher who taught the usual first grade subjects which included reading, writing, arithmetic, science and social studies. The curriculum was integrated so that the various subjects overlapped. For example, the material for teaching reading often included social studies information.³  There is nothing in the record to suggest that the first grade curriculum here involved is substantially different from that of most first grades.

In 1967 Mrs. Krist applied to her superiors to take a sabbatical leave from September 1, 1967, to June 30, 1968, for travel. Paragraph 14(a), Article VI of the Administrative Code for the East Meadow Schools, Long Island, New York, provides that a sabbatical leave may be granted for "Approved travel that will broaden the background of the teacher's experience (itinerary submitted in advance)." When she applied for sabbatical leave, Mrs. Krist discussed her trip with her supervisor and told him of her plans. She was granted permission to take sabbatical leave by the school district and on September 22, 1967, she began her trip from New York City. Her itinerary and the cost allocable to her various activities as prepared by the petitioner are set forth in the margin.⁴ The Tax Court allowed 80 per cent of the original deduction claimed for the tax year 1967.

4. Date Travel Details Amount ------------------------------------------------------------------------------- 9/22/67 Belgian Line "SS Brenghel" $ 209.00 10/4/67 Antwerp to Brusselstrain ? 10/6/67 Air Brussels to London) 46.00 10/8/67 Air London to Dublin) 10/11/67 Train Dublin to Limerick ? 10/14/67 Bus to Galway and Cong and return to Galway 13.00 10/19/67 & 10/20/67 Bus to Cahir, Waterford and train to Dublin 14.00 10/23/67 Air Dublin to London 18.20 10/4-27/67 Hotels 230.00 10/4-27/67 Tours, sightseeing, factories, museums, etc. 60.00 10/27/67 Air London to Paris 26.32 10/27-30/67 Travel, hotels in Paris, Loire Valley, Pherims 50.00 10/31/67- Hotels, travel, tours through Cologne, Stuttgart, 11/20/67 Munich, Vienna, Liechtenstein, Switzerland, Northern 200.00 Italy, Genoa 11/20/67 Air Nice to Barcelona to Madrid 51.00 11/20-22/67 Pension tours 15.00 11/23/67 Train to Lisbon from Madrid 9.00 11/23-30/67 Travel, tours, hotels in and about Lisbon, Portugal 60.00 11/30/67 S/S Funchal to Madeira return trip to Lisbon 12/10/67 44.00 12/10-19/67 Further travel, tours, hotels Lisbon, Portugal 45.00 12/19/67 S/S Tourens Freighter Wilhelmsen Lines leaving Lisbon 672.98 proceeding around African Coast to Manila, Hong Kong, Korea, Japan -------- Total $1,763.- 50

Taxpayer, with her husband, took a 12-day freighter trip from New York to Belgium. They both had two-day visits in Brussels, Dublin and Limerick. After her husband left her on October 14, 1967, she went to Galway where she spent four days planning the remainder of her trip. She spent five more days in Ireland and 23 days in England followed by four days in France. In the course of 21 days of tours in Germany, Austria, Liechtenstein and Italy, she did visit Switzerland, one of her "social studies" countries, and while there visited a one-room school in Lucerne. She then spent a month in Spain and Portugal, with a ten-day side trip to Madeira, and took another freighter around the African Coast to Manila, Hong Kong and Korea, and finally reached her second social studies country, Japan. There she visited five cities and two schools, one large and one small, the latter of which she happened on "quite by accident." To be sure, she had visited a school in Galway and two in London, and she had seen an education film in Manchester.

There is no indication that the travel activities engaged in any of the countries were, except as above stated, other than those that any traveler would engage in. Taxpayer did not arrive at Japan until 1968, after the tax year in question. Other activities after leaving Japan give no indication of being in any way related to her teaching position. Her total time spent visiting schools on her own testimony was about five days out of six months; so far as appears she may have visited two or three families in Japan (albeit in 1968), and while she visited families in other countries those countries were not related to her teaching.

Appellee claims that if she had been on vacation, as opposed to a business trip, she would not have used freighters, would have stayed at better hotels, and her activities would have been geared to swimming and skating rather than the travel and visits she made which she said tired her each day. But the fact that she used a freighter for travel and didn't go to "the best hotels" doesn't indicate a thing one way or the other as to whether her travel was related to her teaching. Economy travel and travel accommodations are as consistent with a personal as with an educational trip. She was six weeks on one freighter trip itself, and while there did no specific reading directed toward her teaching although she did read Louis Nizer and How to Tour Japan on Five Dollars a Day.

When Mrs. Krist returned from her trip she did use in her teaching some of the pictures, costumes, dolls and games that she had acquired during the trip. She also acquired one technique abroad, the use of an individual slate and abacus at each child's desk, which she learned in Japan. Mrs. Krist was also required to write a report and make a presentation to the faculty regarding her trip on her return. The superintendent of the district certified that Mrs. Krist had "completed the program for which she was granted leave" and that " [t]he travel was undertaken for professional improvement in order to enhance her teaching skills."

We agree with Mrs. Krist that in certain cases travel abroad may be "directly related" to the teaching duties of the individual. The main consequence of the travel, however, must be to develop or improve a specific skill or area of knowledge which is of central importance to accomplishing the taxpayer's job. For example, in Gladys M. Smith, 26 CCH Tax Ct. Mem. 1281 (1967), the Tax Court held that a French and Latin teacher who took a Mediterranean cruise was entitled to a deduction. There the ship's crew was French. The teacher spent almost the entire time while aboard ship speaking French and attended many lectures in French. She also visited many sites important to French and Roman literature and history. Thus, though the form of travel indicated that it was personal-a Mediterranean cruise is, of course, generally a tourist holiday-almost every day the teacher developed specific skills and knowledge which were highly relevant to the performance of her teaching duties. See also Rev.Rul. 64-176, 1964-1 Cum.Bull. at 89; Stanley Marlin, supra, 54 T.C. at 566-567. Contrariwise, only the other day the Tax Court held that a second grade teacher on a sabbatical could not deduct her expenses visiting New Zealand, Australia, Asia, and Mediterranean and European countries as well as the Soviet Union and Canada; this was true although she visited schools in New Zealand and Australia and tried to visit them in Yugoslavia and the Soviet Union, and although she took photographs and purchased items which she donated to the school district. Carol J. Cochran, CCH Tax Ct.Rep. Dec. 31, 959(m), 32 CCH Tax Ct. Mem. 466 (1973).

In order for a Sec. 162(a) deduction to be allowed for travel expenses, there must be an identification of the particular job skills that are improved through the travel. It is this crystallization of the job-related benefit which flows from the travel that permits a deduction under Sec. 162(a) of the Code, and removes the travel expenses from the category of non-deductible Sec. 262 personal expenses.

Out of a six-month trip, taxpayer visited schools for part or all of only five days. Taxpayer's visits to her social studies countries constituted but a small fraction of the total time on her trip. A general cultural broadening does not meet the test of the regulations. Carol J. Cochran, supra, 32 CCH Tax Ct. Mem. at 469; cf. Carroll v. Commissioner, supra, 418 F.2d at 95; Cross v. United States, 336 F.2d 431, 434 (2d Cir. 1964). Here taxpayer's activities on her travels varied little from that of any tourist except that she spent more time on ships and perhaps more time with families than many would.

All travel has some educational value, but the test is whether the travel bears a direct relationship to the improvement of the traveler's particular skills. Such a relationship must be substantial, not ephemeral; the trip must be more than the "sightseeing" which both the old and new Regulations denote as "personal activity." See Treas.Reg. Sec. 1.162-5(d) (1958); Treas.Reg. Sec. 1.162-5(e) (1967). See also Adelson v. United States, 342 F.2d 332 (9th Cir. 1965); Stanley Marlin, supra, 54 T.C. at 566; Leo J. Roy, 28 CCH Tax Ct. Mem. 607 (1969). We do not have to say here whether a trip abroad or two-thirds around the world for a first grade teacher could ever directly and substantially relate to educational skills. Suffice it to say here that taxpayer's trip in 1967 was not sufficiently so related as a matter of law.

We reverse the judgment below.