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Sunday, March 30, 2003


Irwin and Jeannine Radnitz challenged the IRS�s disallowance of certain deductions for unreimbursed employee expenses relating to home offices. Irwin is a Hollywood script writer for both films and television, and has probably written several episodes of various television shows that you have seen. Home office expenses for two different houses the Radnitz lived in during the tax years at issue were allowed on the facts. Office expenses for two other apartments rented for a couple months each were allowed, and not even considered �home offices�. Although these other apartments were designed for sleeping, the Radnitz did not sleep in them, and thus they did not fall under the home office rules. The deductions for the two home offices are limited to the amount for gross income from writing, with any excess being carried forward to next year.

The Radnitz argued that that this limitation was an unconstitutional denial of equal protection to authors of speculative works, as their income might not be realized until many years in the future. Tax Court responded that this limitation applies to all taxpayers and does not treat speculative authors any different from other taxpayer who maintain offices in their homes. Tax Court does not recite the equal protection test, but what they seem to be saying is that there can be no equal protection violation where the class of speculative authors is treated the same as other home office workers, and what the Radnitz actually want is unequal treatment. The Radnitz were pro se, and I think Tax Court misconstrued their equal protection argument. Tax Court states, �In essence, petitioners contend that section 280A departs from the traditional principle of matching income and expenses and that the application of that section is unconstitutionally unfair to authors of speculative works.� While it is true that speculative authors are treated the same as other home office workers, that is only because the treatment of all home office workers �departs from the traditional principle of matching income and expenses�. Tax Court should not have compared the class of speculative authors to the larger class of home office workers, they should have compared the class of home office workers to the larger class of employees, where there certainly is unequal treatment. Of course, home office workers are not a suspect or quasi-suspect class, and I think a rational basis for the distinction would be easy to find, but that is the analysis that Tax Court should have conducted.

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