## Facts

- Ramon M. Greenberg was a physician who trained in psychiatry (neurology year, psychiatric residency) and practiced psychiatry at a Boston hospital.
- While practicing, he enrolled in a six-to-seven-year psychoanalytic institute program consisting of (1) several years of his own analysis, (2) seminars and courses in psychoanalytic theory, and (3) supervised treatment of multiple patients over an extended period.
- Completion of the program would make him eligible for institute membership and professional recognition as a psychoanalyst.
- Greenberg deducted the cost of his own analysis on his federal returns as an ordinary and necessary business expense under I.R.C. § 162(a).
- The Commissioner disallowed the deduction, and the Tax Court sustained the disallowance, finding the training was aimed at qualifying Greenberg for a separate specialty (psychoanalysis), not merely improving skills as a psychiatrist.
- Greenberg sought appellate review, asserting the training was undertaken to improve his psychiatric practice and that he intended to remain a psychiatrist while using psychoanalytic methods when appropriate.

## Issues

1. Whether costs of a taxpayer’s own psychoanalysis, incurred as part of an extended psychoanalytic training program, are deductible under I.R.C. § 162(a) as ordinary and necessary expenses of carrying on the taxpayer’s existing practice of psychiatry.
2. Whether, under the Treasury educational-expense regulations, those costs are nondeductible because the program objectively qualified the taxpayer for a new trade or business or separate specialty in psychoanalysis.

## Decision

- The First Circuit affirmed the Tax Court.
- The court held the Tax Court permissibly found, as a matter of fact, that Greenberg’s dominant purpose in undertaking the program was to qualify for the separate specialty of psychoanalysis.
- Because the program qualified him for a new specialty rather than merely maintaining or improving skills in his current practice, the claimed expenses were not deductible under § 162(a).

## Legal Principles

- Deductibility under I.R.C. § 162(a) for educational-related expenses depends on Treasury regulations distinguishing skill-maintenance/improvement from education that qualifies a taxpayer for a new trade, business, position, or substantial advancement.
- Whether an educational program is primarily skill-improving or specialty-qualifying is a factual question; appellate review is limited, and the Tax Court’s findings stand if supported by evidence.
- In applying the regulations, courts may consider the objective character and professional consequences of the program (duration, structure, supervised practice components, and the status or recognition conferred), not only the taxpayer’s asserted motive.
- Where a program culminates in recognized qualification for a distinct professional role or specialty, related costs are treated as nondeductible new-qualification expenses even if the training is also useful in the taxpayer’s existing work.

## Conclusion

The court upheld denial of a psychiatrist’s deduction for the costs of personal psychoanalysis undertaken in a psychoanalytic institute program, concluding the program objectively qualified him for a separate specialty and therefore fell outside § 162(a)’s allowance for ordinary and necessary expenses of carrying on an existing trade or business.


Greenberg v. Comm’r, 367 F.2d 663 (1st Cir. 1966)