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Esogetic Colorpuncture: a deductible expense for mortgage brokers?

October 20, 2010

Mortgage brokering can be a tough business, especially since 2008. It's only natural for a broker to try to find that little something extra to stay above water. For one California broker, the edge was "Esogetic Colorpuncture."

So what is Esogetic Colorpuncture? Let's see what Colorpuncture.com has to say:

Esogetic ColorpunctureTM is a revolutionary evolution in holistic healing and one of Europe's most popular new alternative healing disciplines. The originator of Colorpuncture is a German scientist and naturopath named Peter Mandel who has conducted over 25 years of intensive empirical research to develop this unique system of healing. Colorpuncture involves focusing colored light on acupuncture (and other) points on the skin in order to energize powerful healing impulses in our physical and energy bodies.

So our mortgage broker threw her physical and energy body into her work, earning about $113,000 from two different finance companies. Against that she claimed Schedule C deductions of about $97,000, including about $3,400 in Esogetic Colortherapy education expenses. The Tax Court explains:

Petitioner believes that respondent does not understand her circumstance. She testified that she is a mortgage banker and life coach and does not have a colorpuncture business. Petitioner argues that her colorpuncture education informs her life coaching which in turn contributes to her success as a mortgage banker. Because colorpuncture and life coaching are used in her mortgage banking business, petitioner believes that expenses related to those activities, including certain educational expenses, are deductible as business expenses.

Unfortunately for our color-healer-broker, the Tax Court disagreed, saying that her Colortherapy training qualified her for a new field outside mortgage brokering:

Petitioner's certification as a practitioner of esogetic medicine qualified her to perform tasks and activities significantly different from those she could perform as a mortgage broker. Petitioner admitted at trial that "technically", her certificate entitled her to open a business in colorpuncture therapy. But she explained that she did not and did not intend to open such a practice. What matters, however, is whether the education qualifies the taxpayer for a new trade or business, not whether the taxpayer engages in a new trade or business.

Decision for IRS.

The Moral? Continuing education that is awesome enough to qualify you for a whole new career may be just too awesome to deduct.

Cite: Lewis, T.C. Summ. Op. 2010-156

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