Commissioner v. Soliman

Nader E. Soliman (plaintiff) was an anesthesiologist who worked between three hospitals. None of the hospitals provided Soliman with an office, so he used a spare bedroom in his condominium as a home office. Soliman used the office for 10 to 15 hours a week making phone calls, maintaining records, preparing for work, and staying up to date on continuing-education requirements and medical journals. Soliman did not meet with patients in the office. Soliman deducted a portion of his condominium fees and utilities, as well as depreciation, on his income-tax return as expenses related to his home office as allowed by § 280A of the Internal Revenue Code. The Commissioner of Internal Revenue (the Commissioner) (defendant) disallowed the deductions, arguing that the home office was not Soliman’s principal place of business. Soliman petitioned the United States Tax Court for a redetermination. The tax court reversed the Commissioner and held that the home office was Soliman’s principal place of business. The Court of Appeals for the Fourth Circuit affirmed the tax court and explained that a home office can be a taxpayer’s principal place of business if the taxpayer spends a substantial amount of time in his home office performing essential management or administrative activities and has no other location to perform those activities. The tax court and court of appeals both abandoned the focal-point test, which looked at where a taxpayer performed the services he was paid for. The Commissioner appealed.