Weissman v. C.I.R., 1518

• Decision Date: 20 December 1984
• Docket Number: No. 1518,D,1518
• Citation: 751 F.2d 512
• Parties: , 55 A.F.T.R.2d 85-539, 53 USLW 2352, 85-1 USTC P 9106 David J. and Anne M. WEISSMAN, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. ocket 84-4031.
• Court: U.S. Court of Appeals — Second Circuit

Page 512

751 F.2d 512

83 A.L.R.Fed. 677, 55 A.F.T.R.2d 85-539,

53 USLW 2352,

85-1 USTC P 9106

David J. and Anne M. WEISSMAN, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

No. 1518, Docket 84-4031.

United States Court of Appeals Second Circuit.

Argued July 17, 1984.

Decided Dec. 20, 1984.

Abraham L. Shapiro, New York City (Sidney Fox, Richard Rothman, Shapiro, Shiff, Beilly, Rosenberg & Fox, New York City, on the brief), for petitioners-appellants.

Francis M. Allegra, Atty., Tax Div., Dept. of Justice, Washington, D.C. (Glenn L. Archer, Jr., Asst. Atty. Gen., Michael L. Paup, Ann Belanger Durney, Attys., Dept. of Justice, Washington, D.C., on the brief), for respondent-appellee.

Before NEWMAN and PRATT, Circuit Judges, and KELLEHER, ^* District Judge.

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, Sec. 601(a), 90 Stat. 1520, 1569-72 (codified at 26 U.S.C. Sec. 280A (1982)). ¹ 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. ² 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 ³ 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, 47 T.C.M. (CCH) 520 (1983). The finding of deficiency resulted from the disallowance of the Weissmans' 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. Sec. 280A (1982). We reverse.

I.

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, "[a]t 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. ⁴

II.

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. Sec. 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.

A.

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 types of employee have earned the designation "professor," but the title should not obscure the differences between them.

In this case, the Tax Court focused too much on Professor Weissman's title and too little on his activities. The Court stated:

The focal point of petitioner's activities as a professor would normally be the college where he teaches. We have uniformly held that the focal point of those who teach (at both college and secondary school levels) is the educational institution rather than the home office. While research and writing was an important part of petitioner's duties as an associate professor, it does not shift the focal point of his job away from City College where he taught, met with students, graded examinations, and prepared lectures. This is so even though petitioner spent more time each week doing research and writing at home than he spent in teaching and related activities at the college.

Weissman v. Commissioner, supra, 47 T.C.M. (CCH) at 522 (footnotes omitted). To the extent that the Tax Court found City College to be the focal point of Professor Weissman's employment activities simply because he taught courses there, it erred as a matter of law by failing to consider all aspects of his activities.

A college professor's principal place of business is not necessarily the college at which he teaches any more than a musician's principal place of business is necessarily the concert hall at which he performs. See Drucker v. Commissioner, supra, 715 F.2d at 69 ("Both in time and in importance, home practice was the 'focal point' of the appellant musicians' employment-related activities."). Drucker teaches that in each case the determination of a taxpayer's principal place of business depends on the nature of his business activities, the attributes of the space in which such activities can be conducted, and the practical necessity of using a home office to carry out such activities. ⁵ In Drucker the taxpayers were musicians who spent the majority of their employment-related hours practicing for performances. They required quiet space in order to benefit from their practice sessions, and, as a practical matter, it was necessary for them to practice at home because no adequate space was provided by their employer. Here the taxpayer is a college professor who spends the majority of his employment-related time--80% of it--researching and writing. He needs a place to read, think, and write without interruption, and it is necessary for him to work at home because his shared, unsafe office does not provide the privacy needed to undertake sustained scholarly research and writing. Though the City College library is available for research, it affords Professor Weissman no working space in which his research materials may be set aside or where he may use his typewriter. The lack of a private on-campus office makes Professor Weissman's home office a practical necessity.

Contrary to the Commissioner's contention, the new statute does not single out college professors and deny them the opportunity to qualify for the home-office deduction. Appellee cites a passage of the legislative history of section 280A in which the House Ways and Means Committee criticizes the former "appropriate and helpful" standard for judging home-office deductions:

Thus, expenses otherwise considered nondeductible personal, living, and family expenses might be converted into deductible business expenses simply because, under the facts of the particular case, it was appropriate and helpful to perform some portion of the taxpayer's business in his personal residence. For example, if a university professor, who is provided an office by his employer, uses a den or some other room in his residence for the purpose of grading...