IRS Will Not Follow the Option
in Soliman Versus Commissioner

WASHINGTON - The Internal Revenue Service today said it will not follow the opinion in Soliman v. Commissioner (94 T.C. No. 3, January 18, 1990). The IRS has filed a motion for reconsideration of this opinion and, if it is not withdrawn, the IRS said it will recommend appeal. In the meantime, IRS cautioned taxpayers not to rely upon this opinion.

In the opinion, the court abandoned the "focal point" test for determining deductibility of home office expenses and adopted a facts and circumstances test. The court found that if the taxpayer's home office is essential to the business, if the taxpayer spends substantial time there and has no other location available to perform necessary office functions, then the taxpayer is entitled to the home office deduction.

In its motion for reconsideration of the case, the IRS argues that the opinion is contrary to the legislative intent of the law and creates an unclear standard.

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