Comm'r v. Soliman

Comm'r v. Soliman

Opinion

 [*170]  [***641]  [**703]    JUSTICE KENNEDY delivered the opinion of the Court.

 We address in this decision the appropriate standard for determining whether an office in the taxpayer's home qualifies as his "principal place of business" under 26 U.S. C. § 280A(c)(1)(A). Because the standard followed by the Court of Appeals for the Fourth Circuit failed to undertake a comparative  [**704]  analysis of the various business locations of the taxpayer in deciding whether the home office was the principal place of business, we reverse.

 Respondent Nader E. Soliman, an anesthesiologist, practiced his profession in Maryland and Virginia during 1983, the tax year in question. Soliman spent 30 to 35 hours per week with patients, dividing that time among three hospitals. About 80 percent of the hospital time was spent at Suburban Hospital in Bethesda, Maryland. At the hospitals, Soliman administered the anesthesia, cared for patients after surgery, and treated patients for pain. None of the three hospitals provided him with an office.

Soliman lived in a condominium in McLean,  [****6]  Virginia. His residence had a spare bedroom which he used exclusively as an office. Although he did not meet patients in the home office, Soliman spent two to three hours per day there on a variety of tasks such as contacting patients, surgeons, and hospitals by telephone; maintaining billing records and patient logs; preparing for treatments and presentations; satisfying continuing medical education requirements; and reading medical journals and books.

On his 1983 federal income tax return, Soliman claimed deductions for the portion of condominium fees, utilities, and depreciation attributable to the home office. Upon audit, the Commissioner disallowed those deductions based upon his determination that the home office was not Soliman's principal place of business. Soliman filed a petition in the Tax Court seeking review of the resulting tax deficiency.

 [*171]  The Tax Court, with six of its judges dissenting, ruled that Soliman's home office was his principal place of business. 94 T.C. 20 (1990). After noting that in its earlier decisions it identified the place where services are performed and income is generated in order to determine the principal place of business, the so-called "focal  [****7]  point test," the Tax Court abandoned that test, citing criticism by two Courts of Appeals.  Id., at 24-25 (noting Meiers v. Commissioner, 782 F.2d 75 (CA7 1986); Weissman v. Commissioner, 751 F.2d 512 (CA2 1984); and Drucker v. Commissioner, 715 F.2d 67 (CA2 1983)). Under a new test, later summarized and adopted by the Court of Appeals, the Tax Court allowed the deduction. The dissenting opinions criticized the majority for failing to undertake a comparative analysis of Soliman's places of business to establish which one was the principal place. 94 T.C. at 33, 35.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.