Lopkoff v. Commissioner
Decision Date | 30 November 1982 |
Docket Number | Docket No. 4858-81. |
Citation | 1982 TC Memo 701,45 TCM (CCH) 256 |
Parties | Alexander Lopkoff and Kathern A. Lopkoff v. Commissioner. |
Court | U.S. Tax Court |
Patrick J. McDivitt, 431 West Colfax Ave., Denver, Colo., for the petitioners. Byron Calderon, for the respondent.
Memorandum Findings of Fact and Opinion
Respondent determined deficiencies in petitioners' Federal income taxes for the years 1977 and 1978 in the amounts of $270 and $774, respectively. Concessions have been made by the parties. The issues remaining for decision are: (1) whether petitioners are entitled to deductions for business office expenses incurred in the home under section 280A;1 (2) whether petitioners are entitled to deductions for meals incurred in the course of travel to various locations for the purpose of seeking medical treatment; (3) whether petitioners are entitled to claimed business losses incurred in Mrs. Lopkoff's x-ray delivery activities; and (4) whether petitioners are entitled to deductions for amounts paid to charitable organizations as dues and contributions.
To facilitate the disposition of the factual issues presented, we will combine our findings of fact and the discussion of the applicable legal principles.
Some of the facts have been stipulated and are so found. The stipulated facts and exhibits are incorporated herein by reference.
Petitioners Alexander and Kathern Lopkoff, husband and wife, were residents of La Junta, Colorado at the time that they filed their petition herein. Their Federal income tax returns for the years involved were timely filed with the Internal Revenue Service Center at Ogden, Utah.
During 1977 and 1978, Kathern Lopkoff was employed as Administrative Assistant to the Chief of Staff for the Veterans Administration Hospital in Fort Lyon, Colorado (hereinafter the VA hospital). Alexander Lopkoff was employed as an engineering and vocational instructor during those same years at Otero Junior College, located in La Junta, Colorado. In addition to his teaching salary, Mr. Lopkoff received retirement and disability payments from the government as compensation for the time he spent in military service.
Respondent, under section 280A, disallowed petitioners' deductions for an office in the home in the amounts of $432.83 and $486.83 for 1977 and 1978, respectively.
The reasons why the home office was established by petitioners are as follows: Due to faulty record keeping, the Federal government had threatened to remove the VA hospital from its list of accredited facilities. If this had occurred, the hospital would probably have closed for lack of funding. Mrs. Lopkoff's work at the VA hospital concerned revamping this paperwork to comply with government standards, and thus insure that the hospital would not lose its accreditation. To accomplish this work by the deadline set by the government, this job required excessive amounts of overtime, for which Mrs. Lopkoff received only minimal additional compensation. Though necessitated by her work, she could not receive approval for additional pay for all the extra hours she put in. Mrs. Lopkoff spent almost all of this overtime in a room in petitioners' home which was set aside specifically for such purpose. The home office was utilized instead of the VA office provided for her because of a lack of sufficient security at the VA hospital plus the enormity of the work to be done, which would have required her to stay quite late. The VA hospital was a totally self-contained psychiatric facility which had only one security person on duty after hours. That person would be of no use in case he was needed by Mrs. Lopkoff, as she worked in the administrative wing and the guard was stationed in the psychiatric ward. These circumstances indicate that it was necessary for Mrs. Lopkoff to work in an area other than at her office at the VA hospital.
Realizing this, Mrs. Lopkoff's employer arranged that she have the use of one of the VA hospital's typewriters and all necessary supplies to stock the home office. The office consisted of the typewriter, a desk, chair, stationery, and an extension telephone. While Mrs. Lopkoff used the phone to speak occasionally with other persons concerned with the accreditation, it was essentially there for personal convenience. Mrs. Lopkoff was the only person to use the office. She never greeted clients or met with anyone in the office. Instead, she performed the paperwork that could not be finished at the VA hospital.
Petitioners claimed deductions for the home office, computed by taking the costs of maintaining the entire home times a percentage based on the number of rooms in the home. Respondent bases his challenge to the claimed deductions by alleging that the home office (1) was not a requirement of petitioner's work and therefore was not for the convenience of the employer; (2) it was not her principal place of business; and (3) if it were shown that petitioners were entitled to a deduction, section 280A (c)(5) would limit that deduction to zero because the duties performed in the home produced no income. We hold for respondent on the ground that the home office was not Mrs. Lopkoff's principal place of business. As such, we need not consider respondent's other contentions.
Although factual patterns may vary, this Court has established a clear rule for determining whether individuals are entitled to deductions for office-in-home expenses. The applicable statute is section 280A.2 That section provides a number of hurdles that taxpayers must clear before they are eligible to deduct office-in-home expenses for years beginning after December 31, 1975. To qualify for the deductions taxpayers must satisfy all of three tests: (1) the office must be used exclusively for trade or business; (2) it must be for the convenience of the employer; and (3) it must be the principal place of business for a trade or business of the taxpayer.
We reject petitioners' assertion that the home office and not the VA hospital was Mrs. Lopkoff's principal place of business. We have consistently held that an employee is in the trade or business of being an employee. Drucker v. Commissioner Dec. 39,392, 79 T.C. 605, 612 (1982); Primuth v. Commissioner Dec. 29,985, 54 T.C. 374 (1970). A taxpayer may have only one principal place of business for each business in which he is engaged. Green v. Commissioner Dec. 38,858, 78 T.C. 428, 433 (1982); Curphey v. Commissioner Dec. 36,753, 73 T.C. 766 (1980), on appeal (9th Cir., Nov. 24, 1980). Since Mrs. Lopkoff performed only one function for the VA hospital, it cannot be said that she was engaged in more than one trade or business when utilizing her home office, and she has not contended otherwise. Therefore, Mrs. Lopkoff had only one principal place of business in her work for the VA hospital.
In Baie v. Commissioner Dec. 36,907, 74 T.C. 105 (1980), this Court adopted a "focal point of the activities" test to determine a taxpayer's principal place of business.3 This test was recently upheld in our opinion in Drucker v. Commissioner, supra. See also, Green v. Commissioner, supra; and Jackson v. Commissioner Dec. 37,875, 76 T.C. 696 (1981).
To establish Mrs. Lopkoff's focal point for her activities as an employee, we must therefore examine the nature of her trade or business, the various activities involved, and the locations where those activities were performed. Drucker v. Commissioner, supra, at 613.
The nature of her business was as an administrative employee of the VA hospital. This required no activities over and above those of the typical office worker except for the quantity of work that had to be performed in a short period of time. All of the work could have been done in the VA hospital office.
As to the location of the work, Mrs. Lopkoff testified that 25 percent of her work during the years in question was performed in the home office. We think that this is very significant. While the number of hours spent at each location alone does not determine whether a home office is the focal point of a taxpayer's trade or business, it is an important factor. Green v. Commissioner, supra at 433. The record here shows that Mrs. Lopkoff was an employee of the VA hospital, she had an office provided for her at that hospital, she performed approximately 75 percent of her work at the hospital office, and any work done at the home office was "take home" work that could not be completed at the VA hospital. This makes it clear that the VA hospital was the focal point of her activities as an employee of that institution, and correspondingly it was her principal place of business.
In Bodzin v. Commissioner Dec. 32,115, 60 T.C. 820 (1973), revd. 75-1 USTC ¶ 9190 509 F. 2d 679 (4th Cir. 1975), cert. denied 423 U.S. 825 (1975), the case which led to the enactment of section 280A, an attorney who worked for the government was able to deduct a portion of the costs of his personal dwelling by completing work at home that was not finished at his office. This rationale has been rejected by Congress as a basis for deducting office-in-home expenses. See fn. 3, supra. Essentially, Mrs. Lopkoff is in exactly the same situation as the taxpayer in Bodzin. While we may empathize with Mrs. Lopkoff's personal situation, we can see no fact that sufficiently distinguishes it from that of any other employee who has an office provided for him at his worksite and who instead completes his work at home. See Sharon v. Commissioner Dec. 33,890, 66 T.C. 515 (1976), affd. per curiam 78-2 USTC ¶ 9834 591 F. 2d 1273 (9th Cir. 1978), cert. denied 442 U.S. 941 (1979); Moskovit v. Commissioner Dec. 39,275(M), T.C. Memo. 1982-472 (university professor); Besch v. Commissioner Dec. 38,717(M), T.C. Memo. 1982-15 (elementary school principal); Strasser v. Commissioner Dec. 38,261(M), T.C. Memo. 1981-523 (university professor); Weightman v. Commissioner Dec. 37,986(M), T.C....
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