Court Opinion

ID: 4486393
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:34:24.103813+00
Date Added: 2024-06-11T14:50:34.556432
License: Public Domain

NlMS, C.J., dissenting: With deference to the judgment of a majority of my colleagues, I am unable to detect any reliable basis for determining a taxpayer’s principal place of business in the absence of applying the focal point test (modified as discussed below) first enunciated in Baie v. Commissioner, 74 T.C. 105 (1980), and thereafter consistently applied by this Court. In that case we said the following: “We therefore take it that what Congress had in mind [as to a taxpayer’s “principal place of business”] was the focal point of a taxpayer’s activities * * * .” 74 T.C. at 109. To paraphrase a statement by Judge Ruwe in his companion dissenting opinion, the appellate court opinions in the three cases in which this Court has been reversed for having inappropriately applied the focal point test make it apparent that the single most important factor relied upon by these Courts of Appeals was that the taxpayer spent the majority of his or her business time at the “home office,” rather than at the place where goods or services were provided to customers or clients or where income is produced. To that I would simply add that the Courts of Appeals also stressed the importance of the work performed at home. See Meiers v. Commissioner, 782 F.2d 75, 78 (7th Cir. 1986), revg. T.C. Memo. 1982-51; see also Drucker v. Commissioner, 715 F.2d 67 (2d Cir. 1983), revg. 79 T.C. 605 (1982); and Weissman v. Commissioner, 751 F.2d 512 (2d Cir. 1984), revg. T.C. Memo. 1983-724. It seems to me that each of the above cases involved the Drucker case’s “rare situation” where, on the unusual facts presented, the taxpayer’s principal place of business was not that of his employer because, in time and importance, the office in the home was the true focal point, and therefore the principal place, of the taxpayer’s business. See Drucker v. Commissioner, 715 F.2d at 69. Thus, in order to maintain a reference point from which to determine the principal place of business, I would preserve the focal point test, modified to the extent necessary in the rare situation where in time and importance the home office itself became the focal point of the taxpayer’s activities. The majority holds that to make the determination of principal place of business “the inquiry is appropriately into the surrounding facts and circumstances.” (Majority op. at 26.) But as we stated in Baie v. Commissioner, 74 T.C. at 108, “Prior to the enactment of section 280A, this Court had allowed a deduction for an office in an employee’s residence on the grounds that the maintenance of such office was ‘appropriate and helpful’ under the circumstances.” (Emphasis supplied.) Thus, the reintroduction of a facts and circumstances inquiry takes us all the way back to square one, i.e., to the situation which existed even before Congress took what it thought would be the remedial action of section 280A. The focal point test has been our response to the Congress’ use of the word “principal” in the statutory phrase “principal place of business.” At the least, the statutory phrase requires us to compare the putative principal place with other places that might be principal places and, using some standard, determine whether the putative principal place ranks higher than the other places. The majority’s approach does not seek to make such a comparison. The majority seems to examine the importance of petitioner’s office in the home, but does not examine whether that importance is greater than the importance of, say, the hospital facilities in which petitioner delivers his anesthesiology services. As Judge Ruwe points out, the majority does not even examine whether petitioner spent more time in his office in the home than in the hospital facilities. In effect, the majority has substituted the phrase “important place of business” for the phrase that the Congress enacted. Since on the facts it is indisputable that Dr. Solimán’s activities do not meet the unglossed focal point test, nor do they appear to meet the “time and importance” modification of the focal point test introduced by the Courts of Appeals cases, I would hold for respondent on the principal place of business issue. Chabot, Parker, Clapp, and Parr, JJ., agree with this dissent.