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The office and storage expenses relate to Dr. Novick's use of
petitioners' residence to store medical records and equipment from
Dr. Novick's previously dissolved professional corporation.
(During the years under consideration, Dr. Novick did not conduct
his medical practice, nor did he see patients, in his home.) The
stored medical records were those of so-called inactive patients --
patients that Dr. Novick had not seen within 3 years. The medical
equipment stored in petitioners' residence was equipment that Dr.
Novick had used in his prior medical practice and was not needed by
Sacramento Sierra Medical Group, Dr. Novick's employer during all
years under consideration. Petitioners determined that 30 percent
of their home was used for storage of Dr. Novick's medical records
and equipment. They calculated the office/storage expenses by
taking 30 percent of their home mortgage payments, interest,
taxes, insurance, maintenance, and utilities. Petitioners also
claimed a deduction for home mortgage interest and real estate
taxes on Schedule A of their tax returns, thereby double counting
these items. The parties stipulated that petitioners' home
office/storage was not for the convenience of Sacramento Sierra
Medical Group.
The automobile expenses relate to an automobile that Mrs.
Novick purportedly used to transport medical files, charts, and x
rays from petitioners' home to Dr. Novick's medical office.
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Last modified: May 25, 2011