## Facts

- Dr. Nader E. Soliman, an anesthesiologist, practiced during the 1983 tax year at three hospitals in Maryland and Virginia; he worked about 30–35 hours per week at the hospitals, mostly at Suburban Hospital in Bethesda, Maryland.
- None of the hospitals provided Soliman an office.
- Soliman lived in a condominium in McLean, Virginia, where he used a spare bedroom exclusively as a home office.
- He did not see patients at home but spent about two to three hours per day there performing administrative and preparatory work, including telephone communications, billing and recordkeeping, treatment preparation, continuing education, and reading medical materials.
- Soliman claimed deductions for the business portion of condominium fees, utilities, and depreciation under I.R.C. § 280A(c)(1)(A), asserting the home office was his “principal place of business.”
- The IRS disallowed the deduction on the ground that the home office was not his principal place of business.

## Issues

1. Whether a home office used exclusively for administrative and management tasks qualifies as a taxpayer’s “principal place of business” under I.R.C. § 280A(c)(1)(A) when the taxpayer performs income-producing professional services and meets patients elsewhere.

## Decision

- The Supreme Court reversed the Fourth Circuit and held that Soliman’s home office was not his principal place of business under I.R.C. § 280A(c)(1)(A).
- The Court rejected the lower courts’ test that focused on whether the home office was essential, involved substantial time, and lacked an alternative location for office functions.
- The Court adopted a comparative approach requiring evaluation of (1) the relative importance of activities at each work location and (2) the time spent at each location.
- Applying that approach, the Court concluded the hospitals were Soliman’s principal place(s) of business because they were where he delivered anesthesiology services requiring specialized facilities and where he spent most of his working time.

## Legal Principles

- “Principal place of business” in I.R.C. § 280A(c)(1)(A) means the most important or significant business location, determined through comparison of all locations where business is conducted.
- The principal-place inquiry focuses primarily on:
  - the relative importance of the functions performed at each location (with substantial weight given to where the taxpayer provides services or meets patients/clients, and to locations with unique facilities required by the work); and
  - the time spent working at each location.
- A home office’s legitimate, necessary, or exclusive use for administrative tasks, and the absence of an alternative office, are not by themselves sufficient to establish the home as the principal place of business.

## Conclusion

The Court held that a taxpayer claiming a home-office deduction under I.R.C. § 280A(c)(1)(A) must show, through a comparative assessment of work locations, that the home is the most significant business site; because Soliman’s core anesthesiology services and most working time were at hospitals, his home office was not his principal place of business and the deduction was disallowed.


Commissioner v. Soliman, 506 U.S. 168 (1993)