## Facts

- Ernest Drucker, Patricia Rogers, Philip Cherry, and Ruth Cherry were professional concert musicians employed by the Metropolitan Opera Association and lived in New York City.
- Each maintained a room or portion of a room in their apartment used exclusively and regularly for musical study and practice.
- The musicians practiced about 30–32 hours per week in these home practice areas.
- On their federal income tax returns, they deducted the portion of rent, electricity, and maintenance expenses allocable to the practice areas as home-office expenses under I.R.C. § 280A.
- The Commissioner disallowed the deductions and assessed deficiencies for various tax years (Drucker: 1976–1977; Rogers: 1977; the Cherrys: 1976).
- The Tax Court denied the deductions, reasoning that the musicians’ principal place of business was Lincoln Center (where rehearsals and performances occurred) and that home practice was not a condition of employment.

## Issues

1. Whether, under I.R.C. § 280A(c)(1)(A), the musicians’ exclusive home practice areas constituted their “principal place of business,” permitting deduction of allocable home expenses.

## Decision

- The Second Circuit reversed the Tax Court.
- The court held that the musicians’ home practice areas were their principal place of business within the meaning of I.R.C. § 280A(c)(1)(A).
- The court allowed the claimed deductions for the allocable portions of rent, utilities, and maintenance.

## Legal Principles

- A home-office deduction under I.R.C. § 280A(c)(1)(A) may be allowed when a portion of a dwelling is used exclusively and regularly as the taxpayer’s principal place of business.
- “Principal place of business” is determined by a functional assessment of where the most important business activities occur, considering both the nature of the work and the time devoted to competing work locations.
- For performing musicians, sustained practice is a necessary professional activity; a dedicated home practice space can be the principal place of business even if rehearsals and performances occur elsewhere.
- The absence of an express employer requirement to work at home is not dispositive when the work’s economic reality makes the home activity essential to the trade or business.
- I.R.C. § 280A targets improper conversion of personal living expenses into business deductions; it does not require denial where a segregated residential area is devoted exclusively to essential business activity.

## Conclusion

The Second Circuit concluded that the musicians’ substantial, essential at-home practice made their exclusive home practice areas the principal place of business for purposes of I.R.C. § 280A, so the allocable home expenses were deductible.


Drucker v. Commissioner, 715 F.2d 67 (2d Cir. 1983)