Concern 2: Is an MBA a minimum educational requirement for my trade or business (required answer: no)? This disallowance criteria is generally not applicable to most MBAs pursuing graduate study in business, since their undergraduate degree will usually satisfy minimum entry requirements in most firms.
Concern 3: Is the education part of a study program that can qualify you in a new trade or business (required answer: no)? You are generally a good candidate to deduct your MBA expenses if you had strong business skills prior to business school. It’s acceptable to change industries and employers when you graduate. However, you must be able to demonstrate that your MBA maintained & improved your business skills and you’ll continue to use them in the position you take when you matriculate. Furthermore, many MBA classes are general in nature and are applicable to a wide range of management tasks and problems. Even more specialized classes i.e. a corporate tax class, should be valuable to most managers, but without qualifying
them for a new trade or business. However, the language in the regulation and case law with respect to this limitation is so vague that it would be possible for the IRS to make such an assertion and very difficult for an individual to prove otherwise.
Concern 4: Does an MBA maintain or improve skills required doing your present work (required answer: yes)? The case law on this issue varies, but it is clear that the more business-like your old career and duties, the more likely you will be considered to be maintaining or improving skills.
The proper application of the above rules for deducting MBA expenses is frequently uncertain. Each person must analyze their specific circumstances in evaluating whether or not they qualify to take a tax deduction for graduate school. If you have questions with respect to your personal situation, I would strongly recommend that you utilize the services of a qualified tax preparation firm.
IRS Rules for Determining Eligibility