New York Advisory Opinion TSB-H-80(241)I: Does a technical editor, writer, and translator's income qualify as the practice of a profession exempt from New York's unincorporated business tax?

Plain-English summary

Jack Segura wrote, edited, and provided counseling in technology, sciences, specialized medicine, and technical and medical language translation. He'd studied Electrical Engineering - Communications at night for four years at the Pratt Institute and Radio and Television at night for two years at the RCA Institute, but never earned a higher education degree. Less than one-tenth of his business income came from technical and medical translations; more than 80% came from writing, editing, interviews, symposiums, journal articles, movies, cassettes, and other translations. Capital wasn't a material income-producing factor in his work. He asked whether his activities as an editor and writer qualified as the practice of a profession, exempting his income from New York's unincorporated business tax (UBT) under Tax Law section 703(c).

The regulations (20 NYCRR 203.11(b)(1)(i)) define "other profession" as an occupation involving "a professed knowledge of some department of science or learning, gained by a prolonged course of specialized instruction and study," applied to advise, guide, or teach others - explicitly distinguishing genuine professional knowledge from "mere skill and the application of knowledge to uses for others as a vocation."

Even though Segura met the income-composition tests (capital not a material factor, more than 80% personal-service income), the Department found he hadn't shown his editing and writing activities rose above mere skill applied as a vocation. It specifically noted his education - night courses in electrical engineering and radio/television, without a degree - didn't amount to the "prolonged course of specialized instruction and study" the regulation requires. Without that showing, his business activities couldn't be treated as the practice of a profession, and his income remained subject to the UBT.

What this means for you

Self-taught writers, editors, and technical translators without a formal degree

Meeting the 80%-personal-services and capital-not-material-factor tests isn't enough by itself - you also need to show your work draws on knowledge from a genuine "prolonged course of specialized instruction and study," which the Department reads as something more substantial than night classes without a completed degree.

Anyone comparing this ruling to the Department's other writer/author opinions

Contrast this result with the Department's treatment of a newspaper columnist and freelance writer (TSB-A-81(11)I), whose authorship income WAS treated as an exempt profession - the difference here wasn't the type of writing work, but the taxpayer's failure to show the specialized-education prerequisite the regulation demands.

Accountants advising self-employed writers, editors, or technical specialists

Document the taxpayer's specific educational background and credentials carefully before claiming the professional exemption - a career built on practical skill and informal or incomplete study, however extensive, may not satisfy the "prolonged course of specialized instruction and study" standard even if the income composition otherwise qualifies.

Common questions

Q: If more than 80% of my income comes from personal services and capital isn't a factor, do I automatically qualify for the professional exemption?
A: No - this ruling shows those income-composition facts are necessary but not sufficient; you also need to show your occupation involves knowledge from a genuine prolonged course of specialized instruction and study.

Q: Does lacking a college degree automatically disqualify someone from the professional exemption?
A: Not necessarily in every case, but here the Department treated the taxpayer's night-school study (without a completed degree) as falling short of the "prolonged course of specialized instruction and study" standard - the specific facts of your educational background matter.

Q: Why did a different writer (a newspaper columnist) qualify for this exemption in another ruling but this taxpayer didn't?
A: The Department's other writer ruling (TSB-A-81(11)I) didn't turn on formal education at all - it focused on whether the writing was genuine authorship versus advertising/promotional copy. This ruling instead turned on this specific taxpayer's failure to establish the specialized-education element of the professional-status test.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1980.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/h80_241i.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-H-80-(241)-I
Income Tax
August 26, 1980

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. I800408B

On April 8. 1980. a Petition for Advisory Opinion was received from Mr.
Jack Segura, 628 Gateway, Valley Cottage, New York 10989.
The issue is whether the activities of Petitioner as an editor and writer
constitute the practice of a profession exempt from the Unincorporated Business
Income Tax pursuant to section 703(c) of the Tax Law and 20 NYCRR
203.11(b)(1)(i).
Mr. Segura writes, edits, and provides counseling, in technology and
sciences, specialized medicine, and technical and medical language translations.
Mr. Segura attended Pratt Institute in Brooklyn, New York, where he studied
an Electrical Engineering - Communications option for four years at night. He
also studied Radio and Television at RCA Institute at night for two years. He did
not receive any higher educational degree.
Less than one-tenth of Mr. Segura's business income is derived from
technical and medical translations. More than 80 percent of his gross income is
derived from personal services including writing, editing, interviews,
symposiums, journal articles, movies, cassettes, and translations.
Capital is not a material income producing factor.
20 NYCRR 203.11(b)(1)(i) states in part: "...the term other profession
includes any occupation or vocation in which a professed knowledge of some
department of science or learning, gained by a prolonged course of specialized
instruction and study, is used by its practical application to the affairs of
others, either advising, guiding or teaching them, and in serving their interests
or welfare in the practice of an art or science founded on it. The word
profession implies attainments in professional knowledge as distinguished from
mere skill and the application of knowledge to uses for others as a vocation...."
Mr. Segura has not shown that his activities as an editor and writer are
more than mere skill and the application of knowledge to uses for others as a
vocation. Further, his vocation is not one in which he has a professed knowledge
gained by a prolonged course of specialized instruction and study. Consequently,
Petitioner's business activities cannot be considered as the practice of a
profession exempt from the New York State Unincorporated Business Income Tax.

Dated: June 30, 1980

s/LOUIS ETLINGER
Deputy Director
Technical Services Bureau

JAMES H. TULLY, JR., COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR