The Smeal Executive MBA Team Blog

First, a word of caution:  I am not an accountant, I am simply passing on information that students in the Smeal EMBA program have shared with me.  The following is my understanding of the information given to me by them, and should be reviewed with an accounting professional.

The tuition-and-fees deduction for part-time and full time MBA students is relatively new (2006). It allows taxpayers to deduct higher-education expenses as an adjustment to gross income instead of claiming the Hope or Lifetime Learning credit.

This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040).  This deduction might be beneficial to you if you cannot take either the Hope or Lifetime Learning credit because your income is too high. The tuition-and-fee-deduction limitation is separate and apart from the work-related education deduction. However, obviously you cannot deduct the same expenses twice.

You can deduct the costs of qualifying work-related education as business expenses. An example is education that maintains or improves skills needed in your present work.

However, it is not work-related education if it:

1.    Is needed to meet the minimum educational requirements of your present trade or business, or

2.    Is part of a program of study that will qualify you for a new trade or business.

You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. The IRS provides the following example of qualifying for a new trade in contrast to leading to a degree: You are an accountant. Your employer requires you to get a law degree at your own expense. You register at a law school for the regular curriculum that leads to a law degree. Even if you do not intend to become a lawyer, the education is not qualifying because the law degree will qualify you for a new trade or business. While an MBA will make you more marketable, it in itself does not lead to a new trade provided you already have a business background.

An MBA does not necessarily lead to a new trade but rather tends to improve your current skills. Even if getting an MBA will lead to a new position within the company, so long as it is in the same general area of your current duties, this is not considered a new trade.

For an employee, work-related education expenses are miscellaneous itemized deductions on Schedule A. Unlike your wife’s deduction, yours is not limited to only tuition and fees. The following education expenses can be deducted.

1.    Tuition, books, supplies, lab fees and similar items.

2.    Certain transportation and travel costs.

3.    Other education expenses, such as costs of research and typing when writing a paper as part of an educational program.

Your deduction should be reduced by employer reimbursements.  As I mentioned before - I am not an accountant, and before you do anything please consult an expert in this area!

The fall guest speaker series at Penn State’s Smeal College of Business comes to a close on Dec. 5 when Daniel Mead, president of Verizon Services Corp., will be the college’s guest for Leadership in Focus: Executive Insights.

Mead will participate in an interactive on-stage conversation with Smeal Dean James B. Thomas, during which he will discuss his role at Verizon, offer some insights on leadership and business trends, and answer questions from the audience.  The conversation will be transmitted live to Smeal EMBA students and alum’s in the Phialdelphia area.

While on campus, Mead will also network with faculty and meet in small groups with interested students.

As president of Verizon Services Corp., Mead is responsible for overseeing all of the finance operations, real estate, and supply chain services for all Verizon companies. He is also responsible for Verizon’s 24 percent ownership of Vodafone Italia, a Vodafone-Verizon wireless joint venture in Italy, and sits on the Vodafone Italia Board of Directors.

Mead has a lead strategy role with an emphasis on transforming Verizon’s operating structure. He also co-chairs Verizon’s Corporate Responsibility and Workplace Culture Council, through which he is leading a variety of “green” initiatives that aim to reduce Verizon’s impact on the environment.

Mead was appointed to lead Verizon Services in October 2005, when the unit was created. He was one of the founding senior executives responsible for launching Verizon Wireless (VZW) in July 2000. From March 2001 to October 2005, he was president of VZW’s Midwest Area, a 15-state region with a population of 61 million that stretches from Pennsylvania to the Dakotas and from Minnesota to Kentucky. He has held various other leadership roles in telecommunications functions during his 29 years with Verizon and its predecessor companies.

Mead holds a bachelor’s degree in Quantitative Business Analysis and Finance and an M.B.A. from Smeal.

Among top Executive MBA programs nationwide, more than 60% of students cover some or all of the program costs on their own. Lack of or limited corporate financial support should not be a barrier to your enrollment in an Executive MBA program. Several student loan products are available to help cover the costs of the program.

All candidates are eligible for the federal Stafford Loan program which provides up to $20,500 in low-interest federal student loans per academic year. In addition, federal graduate PLUS loans can cover all remaining costs of the program. Low interest rates and flexible repayment timelines make these products an attractive option for those considering an Executive MBA. For more information on student loan options, please visit the Penn State student aid Web site. To learn more about financial aid options, please contact the Executive MBA Program office at 1-866-999-EMBA.

Scholarships are regularly offered to students who work for the non-profit sector.  To learn more about scholarships that Smeal offers to executive MBA students, please contact us directly at 866-999-3622 or visit our website www.smeal.psu.edu/execmba.

While the stock market is generally believed to be merely a barometer of economic health, new research co-authored by one of our EMBA professors here Penn State’s Smeal College of Business finds that the pessimism in our stock markets may actually be the cause of our struggling economy, rather than just an indicator of it.

In the current financial crisis, the rapidly spreading negative beliefs about the value of mortgage‐backed securities may have contributed more to the economic meltdown than the actual properties of those securities. That is, negative perceptions about the economy may weigh more heavily on economic performance than the actual health of production and investment activity that drives the economy.

“Our research shows that markets can exacerbate the negative,” says Anthony Kwasnica, associate professor of business economics at Smeal, who conducted the research along with Shimon Kogan of the University of Texas and Roberto Weber of Carnegie Mellon University. “Even when fundamental economic properties remain unchanged, we find that financial markets can lead investors to highly pessimistic beliefs that become self-fulfilling and can cause the economy to underperform.”

Kwasnica says that short selling and other techniques that reward negative performance communicate pessimism about the economy that can infiltrate the markets and may actually cause economic performance to dip into the negative.

Kwasnica just completed teaching an EMBA favorite this past week, bringing an incredible amount of current events into our dynamic classroom environment.

Cardiff University in Great Britain is holding a conference next month to mark the 30th anniversary of a seminal book in the management discipline co-authored by Charles Snow, Mellon Foundation Faculty Fellow at Penn State’s Smeal College of Business.

“Organizational Strategy, Structure, and Process: A Reflection on the Research Perspective of Miles and Snow” will be held Dec. 3-5 in honor of Snow and Raymond Miles, professor emeritus at the University of California, Berkeley, co-authors of one of the most influential books in the strategic management literature, Organizational Strategy, Structure, and Process.

The conference, which is sponsored by Cardiff University and the Advanced Institute for Management Research, will feature presentations from researchers in various fields who have used the Miles-Snow strategy typology in their research. Approximately 20 researchers from management, marketing, information technology, and public sector management will present at the conference, and Miles and Snow will deliver the opening address. The conference papers will be published in a book.

Originally published in 1978 and reissued by Stanford University Press for its 25th anniversary in 2003, Organizational Strategy, Structure, and Process bridges the fields of strategic management and organizational behavior. The book has been cited in more than 1,100 scholarly works, has been translated into Japanese, German, and Chinese, and is used widely in classrooms around the world.

Smeal Executive MBA students learn from the 7th best faculty in the US, 17th best in the world.

What differentiates your program? 

I love that question when I get it from prospective students - mainly because the answer is so simple - faculty.  Faculty not only differentiate the Smeal program - they (faculty) are what makes any program, and ought to be the first thing you look at when thinking about joining an executive MBA (any executive MBA).  Sure, the Smeal EMBA program offers an unparalleled out-of-classroom experience (networking, executive & career coaching, in-residence Friday’s with faculty/staff), but I would contend that it is the faculty that have the biggest impact on your learning, and ought to be the starting point of any discussion regarding the quality of a school.  As an EMBA student at Smeal you can bet on one thing - at Smeal you will be taught by the best MBA faculty in the country. 

In fact, at Smeal you get full time faculty members who have the academic credentials, teaching experience, and the real-world consulting/corporate experience you need to get a broad based and up to date education.  The mix of these three items (credential, teaching history, real world experience) provide the student an education that can not be matched by programs who use faculty that sometimes hold full time jobs in addition to teaching or are retired executives who use personal experience to teach, or in some cases use adjunct faculty that may be less experienced than members of the student base.

If you have doubts about the quality of faculty and wonder whether faculty really makes a difference consider sitting in on a class to take a “test drive” of the class room environment.  At Smeal you can sit in on a class as your schedule allows, no matter what class is in session - we have only the best, and are proud to offer you a few minutes in the class to see for yourself. 

I get that question almost every week.  And my answer is always the same - yes!  But I always follow up with this - but it depends mostly on your own personal calculations for investment and how you want to calculate return.  For most, the concept of ROI comes down to tuition cost versus increases in salary.  For those people I provide this - 40% of our students report a salary increase of more than 10% (annually) since they received their MBA’s from Smeal. This is pretty substantial, when you consider that the Hay Group reported that US salary increases in 2007 were a mere 1.7%. 

I tend to think that when looking at ROI there is more to the “R” than salary - just as I think the real investment in an executive MBA is more than the tuition (think time & effort).  Our students agree, and when asked what they cite as an alternative on the “R” side of the equation they add things like promotions, new opportunities, confidence to perform better or start new ventures, increased ability to lead, or an increased ability to give back to society. 

To learn more visit our website www.smealemba.com!