Appeal from a judgment of the United States Tax Court (Perry Shields, Judge) disallowing a deduction for home-office expenses claimed by a college professor.
Newman and Pratt, Circuit Judges, and Kelleher,*fn* District Judge. Kelleher, District Judge (dissenting).
JON O. NEWMAN, Circuit Judge:
Prior to 1976 courts generally permitted income tax deductions for expenses related to the maintenance of a home office if the office was merely "appropriate and helpful" to the taxpayer's business. Recognizing the potential for abuse inherent in this standard, Congress curtailed the availability of the home-office deduction in the Tax Reform Act of 1976, Pub. L. No. 94-455, § 601(a), 90 Stat. 1520, 1569-72 (codified at 26 U.S.C. § 280A (1982)).*fn1 As applied to educators, this provision has been viewed by the Internal Revenue Service, often with the approval of the Tax Court, as creating virtually an absolute rule against deducting expenses associated with the maintenance of an office in one's home.*fn2 Without returning to the "appropriate and helpful" standard, we conclude that the new provision, though strict, creates a test that can be met by educators and that the factual findings made by the Tax Court in this case involving a college professor establish his entitlement to a home-office deduction, despite the Tax Court's contrary conclusion.
David J. Weissman and Anne M. Weissman*fn3 appeal from a judgment of the United States Tax Court (Perry Shields, Judge) upholding the Commissioner of Internal Revenue's determination of a deficiency in their joint 1976 income tax return. Weissman v. Commissioner, 1983 T.C. Memo 724, 47 T.C.M. (CCH) 520 (1983). The finding of deficiency resulted from the disallowance of the Weissman's deduction of $1,540 of rent and expenses allocable to that portion of their apartment used as an office. The Tax Court agreed with the Commissioner that appellants failed to meet the requirements of section 280A of the Internal Revenue Code ("Code"), 26 U.S.C. § 280A (1982). We reverse.
The Tax Court made numerous findings concerning Professor Weissman's duties and work locations. During 1976 Professor Weissman was employed as an associate professor of philosophy at City College of the City University of New York ("City College"). In addition to teaching, meeting with students, and grading examinations, Professor Weissman "was required to do an unspecified amount of research and writing in his field in order to retain his teaching position." 47 T.C.M. (CCH) at 521. Under the University bylaws a candidate for promotion to associate professor must possess a record of significant scholarly achievement in his field, and, as the Tax Court found, "at City College, as in other university communities, scholarly achievement is usually measured by research, writing and publication in one's field." Id.
Professor Weissman worked between 64 and 75 hours each week, but spent only 20% of this time at the City College campus. He spent the remaining 80% of his working hours at the office in his apartment, where he did the bulk of his research and writing. The results of these efforts included several articles and two books on philosophy. His home office consisted of two rooms and a connecting bathroom in his ten-room apartment. The Tax Court found that he used his home office "exclusively for research and writing." Id.
Although City College provided Professor Weissman with an office on campus, he was obliged to share the space with several other professors. The office contained several desks, chairs, and filing cabinets, but no typewriter. Moreover, as the Tax Court found, it was "not a safe place to leave teaching, writing, or research materials and equipment." The City College library was available to Professor Weissman from 9:00 a.m. to 9:00 p.m. on weekdays, but it did not afford him any private space in which to work.*fn4
To qualify for a home-office deduction, a taxpayer must show that the office in his residence "is exclusively used on a regular basis" as his "principal place of business." 26 U.S.C. § 280A(c)(1) (1982). An employee, such as Professor Weissman, must also demonstrate that the office is maintained "for the convenience of his employer." Id. The fact that Professor Weissman used his home office exclusively and on a regular basis for employment-related activities is not disputed. Therefore we turn first to the issue whether the Tax Court correctly concluded that City College was Professor Weissman's principal place of business.
In identifying a taxpayer's principal place of business, the Tax Court often seeks to ascertain the "focal point" of his business activities. Jackson v. Commissioner, 76 T.C. 696, 700 (1981); Baie v. Commissioner, 74 T.C. 105, 109 (1980). While this may be helpful in many cases, when a taxpayer's occupation involves two very distinct yet related activities, such as practice and performance, see Drucker v. Commissioner, 715 F.2d 67 (2d Cir. 1983), or writing and teaching, the "focal point" approach creates a risk of shifting attention to the place where a taxpayer's work is more visible, instead of the place where the dominant portion of his work is accomplished.
In the case of educators, the focal point approach does not always adequately distinguish between individuals with very different employment activities. No doubt many college professors spend most of their working hours teaching or engaging in teaching-related activities such as preparing for classes, meeting with students, and grading examinations and papers. Some college professors, however, spend the major share of their working hours researching and writing. Both ...