Click here to go back
A neurosurgeon contracted with a medical center to establish a neurosurgery practice in North Carolina in 2004. The doctor formed a corporation to conduct her medical practice. The only business income reported on her federal income tax returns for 2004?2006 was W-2 income received from the corporation. In 2006, the doctor conducted her medical practice as an employee of an educational institution, reporting all income as W-2 wages and dissolving her corporation in 2007. A dispute arose between the doctor and the medical center over the terms of the contract, resulting in significant legal fees. In addition to the legal fees, the doctor paid fees to store medical records of patients she had treated while an employee of the corporation, as well as travel to attend medical conferences. On her 2008 income tax return, the doctor deducted the legal and storage fees, travel, and other professional expense on a Schedule C. Because the doctor never established that she practiced medicine other than as an employee, the Tax Court held that the expenses were deductible as itemized deductions, rather than as self-employed expenses. Elizabeth A. Vitarbo, TC Summary Opinion 2014-11 (Tax Court).