In the case of Mameri v. Commissioner, T.C. Summ. Op. 2016-47 the Tax Court denied a taxpayer’s attempt to claim an American Opportunity Tax Credit for funds expended to buy a computer for his studies.
The taxpayer’s education program is described by the Court below:
During the spring 2012 semester petitioner took courses including English 5, a critical thinking composition course. The instructor required students to build an anthology of peer-reviewed sources on a research topic generated during class. The anthology project Petitioner also provided a signed letter from his English instructor dated May 12, 2016, stating that although the bulk of work for the English course could be performed using the Berkeley City College library's databases, the library had limited hours and no laptop loan program, so “students whose schedules didn’t allow for much time on campus to use the databases during the library hours were limited to using personal computers to complete their work.”started the third week of the semester and was due at the end of the semester. Students could choose a topic, conduct extensive online research on the topic, and put together an anthology of the sources found. Work performed during class hours included discussion and critical thinking. Students conducted online research for the anthology outside of class hours. Petitioner spent six to seven hours per day when researching for the class.
The Berkeley City College library had online databases available for student use, but the library had limited hours and did not have a laptop loan program. Petitioner attended both morning and evening classes and worked at Guardsmark in the afternoon.
The taxpayer traveled to Algeria in May of 2012 and purchased a computer which he took with him to Algeria, and which he used to complete his coursework. The taxpayer also produced the following:
Petitioner also provided a signed letter from his English instructor dated May 12, 2016, stating that although the bulk of work for the English course could be performed using the Berkeley City College library's databases, the library had limited hours and no laptop loan program, so “students whose schedules didn’t allow for much time on campus to use the databases during the library hours were limited to using personal computers to complete their work.”
The taxpayer claimed the $1,288 cost of the computer he purchased as a portion of the expenses for which he claimed the American Opportunity Tax Credit for the year in question.
The Court pointed out the general provisions for expenses eligible to be counted in computing the credit:
Generally, “qualified tuition and related expenses means tuition and fees required for enrollment or attendance”. Sec. 1.25A-2(d)(1), Income Tax Regs. A “required” fee is one that is "required to be paid to the eligible educational institution as a condition of the student’s enrollment or attendance at the institution.” Id. subpara. (2)(i). Amounts paid for books, supplies, and equipment are eligible only if the fees must be paid to the institution for the student's enrollment or attendance. Id. subdiv. (ii). For example, if students are required to purchase books and reading materials for a course but can purchase them from another source such as an off-campus bookstore, they are not required to be purchased from the institution for enrollment or attendance. See id. subpara. (6), Example (2).
The purchase of the computer fell short of this requirement for a number of reasons. First, he had not acquired the computer from the educational institution, rather purchasing it from a local computer store. As the Court explained:
There is no evidence that petitioner was required to purchase the computer directly from Berkeley City College. Instead petitioner was able to and in fact did purchase the computer from a third party. Thus the cost of the computer is not an expense that qualifies for the education credit. See id. subpara. (6), Example (2).
Even if it had been required to be purchased from the institution, there was a problem. Although clearly it was helpful to him and, arguably, he might not have completed his studies without the computer, that would not be enough.
As the Court continued:
Petitioner asserted that, because of his visit to Algeria, he needed the computer to complete the anthology assignment. Petitioner did not indicate that Berkeley City College required him to purchase the computer. Additionally, the instructor's letter states only that students at Berkeley City College had limited options to use library computers and does not indicate that the computer was required for the class or to attend the college. Thus petitioner has not shown that purchasing the computer was a condition of enrollment or attendance as required by the regulation. See id. subparas. (1) and (2).
Thus the taxpayer was denied the credit for these expenses.