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Tax court strikes down home-office deduction under Soliman.

Crawford, a physician, provided emergency medical services on an independent-contractor basis in several Dallas-area hospitals. He was not on the staff of any hospital and none of them gave him office space.

It was part of Crawford's job to render follow-up services to his emergency-room patients. Crawford used his home office to do this work. Under his contracts, Crawford also could have opted to use hospital facilities.

The home office, which made up about 200 of Crawford's residence, contained examination tables, a separate waiting area and medical equipment. He also used the office to do paper work. He spent 3 to 4 hours there for every 10 hours spent at the hospitals. Crawford deducted home-office expenses for 1985 and 1986. The Internal Revenue Service audited Crawford and disallowed the homeoffice deductions.

Under Internal Revenue Code section 280A, a taxpayer claiming deductions for home-office expenses must show the office is used exclusively and regularly as (1) the principal place of business for the business involved or (2) a place for meeting customers or clients. Other requirements, not discussed here, also must be met. Under the U.S. Supreme Court decision in Soliman, when a taxpayer has more than one business location, the "principal place" of business is where the most important functions are performed. (See "Supreme Court Gets Tough With Home-Office Deductions," JofA, Mar.93, page 26.)
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jul 1, 1993
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