## Facts

- David B. Hubbard, an optometrist, owned and operated an optometric practice in Winnemucca, Nevada; Janis Hubbard joined him in filing their joint return.
- For many years, Hubbard’s practice was the only optometric practice in a three-county area (Humboldt, Pershing, and Lander Counties), with the next nearest optometrist about 120 miles away.
- Hubbard commonly tested patients using “subjective refractions” with a manual refractor mounted at an examination chair, a process that required patients to look through lenses and answer a series of questions.
- Some patients with disabilities could not be accurately or effectively tested using the subjective method:
  - Certain mentally handicapped and hearing-impaired patients could not understand or respond to the questions needed for subjective refractions.
  - Some physically disabled patients could not be moved from wheelchairs into the examination chair positioned behind the manual refractor.
  - Written communication with hearing-impaired patients was difficult while also trying to use the manual refractor, affecting test accuracy.
- To provide vision-testing services to patients with disabilities whom he previously could not serve, Hubbard purchased an automatic refractor and an instrument stand.
- The new equipment allowed Hubbard to perform objective refractions that did not depend on patients answering questions and could be conducted with patients remaining in wheelchairs.
- On their 1997 federal income tax return, the Hubbards claimed the I.R.C. § 44 disabled access credit for the cost of the automatic refractor and instrument stand as “eligible access expenditures.”
- The IRS disallowed the credit and issued a notice of deficiency (including a determined deficiency of $5,814 for 1997), and the Hubbards petitioned the United States Tax Court.

## Issues

1. Whether the cost of the automatic refractor and instrument stand purchased for Hubbard’s optometric practice qualified as “eligible access expenditures” for the I.R.C. § 44 disabled access credit for the 1997 tax year.

## Decision

- The Tax Court held that the cost of the automatic refractor and instrument stand qualified as “eligible access expenditures” under I.R.C. § 44.
- The court concluded the Hubbards were entitled to the disabled access credit claimed for those purchases.
- The court rejected the Commissioner’s disallowance of the credit and reduced the deficiency to the extent it was based on that disallowance.

## Legal Principles

- I.R.C. § 44 provides a disabled access credit to qualifying small businesses for “eligible access expenditures” paid or incurred to make a business’s goods or services accessible to individuals with disabilities, including expenditures tied to compliance with disability-access requirements.
- “Eligible access expenditures” are not limited to building modifications; they may include equipment or other items purchased to address barriers that prevent individuals with disabilities from receiving the business’s services.
- To qualify, the expenditure must have a direct relationship to providing access for individuals with disabilities; the court focuses on why the item was purchased and how it functioned in making services available to disabled individuals who otherwise could not be effectively served.
- The fact that an item is tangible business equipment does not by itself defeat § 44 treatment when the record shows the purchase was made to provide access to services for disabled individuals.
- Allowance of the § 44 credit is evaluated under the statutory definition of “eligible access expenditures,” not simply by labeling the item as ordinary business property that might otherwise be recovered through depreciation.

## Conclusion

In Hubbard v. Commissioner, the Tax Court held that an optometrist’s purchase of an automatic refractor and instrument stand qualified for the I.R.C. § 44 disabled access credit because the equipment was acquired to make vision-testing services available to patients with disabilities whom the practice previously could not effectively examine.


Hubbard v. Commissioner, 86 T.C.M. (CCH) 276 (2003)