T.C. Memo. 2003-245



                      UNITED STATES TAX COURT



       DAVID B. HUBBARD AND JANIS HUBBARD, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1764-02.               Filed August 14, 2003.



     David B. Hubbard and Janis Hubbard, pro sese.

     Alan J. Tomsic, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     SWIFT, Judge:   Respondent determined a deficiency in

petitioners’ Federal income tax for 1997 in the amount of $5,814.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue, and
                               - 2 -

all Rule references are to the Tax Court Rules of Practice and

Procedure.

     The issue for decision is whether the cost of certain

equipment purchased by petitioner for use in his optometric

practice qualifies under section 44 for the “disabled access”

Federal income tax credit.


                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

     At the time the petition was filed, petitioners resided in

Reno, Nevada.   Hereinafter, references to petitioner in the

singular are to petitioner David Hubbard.

     From 1977 through 2000, petitioner, was an optometrist and

owned and operated his own optometric practice in Winnemucca,

Nevada.   During those 23 years, the only optometric practice

located in a three-county area (namely, Humboldt County, Pershing

County, and Lander County, Nevada), was petitioner’s.   The

optometric practice located closest to petitioner’s practice was

in Elko, Nevada, approximately 120 miles from Winnemucca.

     As an optometrist, petitioner diagnosed and treated certain

eye diseases, tested vision problems, prescribed corrective

lenses, and sold eyeglasses and contact lenses.

     Generally, prior to 1997, to test the vision of his patients

and to prescribe corrective lenses, petitioner determined his

patients’ “refractive error” by performing subjective refractions
                                - 3 -

using a manual refractor.    To perform subjective refractions,

petitioner would have his patients sit in an examination chair

behind a manual refractor, view various charts through lenses in

the manual refractor, and answer a series of questions that

petitioner would ask them.    Subjective refractions of patients

would take approximately 5 to 10 minutes each.

     On disabled patients, however, petitioner occasionally was

not able to perform subjective refractions.    For example, some

mentally handicapped patients and hearing impaired patients were

unable to understand and answer questions asked during subjective

refractions, and some physically disabled patients could not be

moved from their wheelchairs into petitioner’s examination chair

behind the manual refractor.

     Although petitioner and hearing impaired patients could

write notes to each other during subjective refractions, it was

difficult for hearing impaired patients to look through the

manual refractor while reading notes from and writing notes to

petitioner, thereby affecting the accuracy of the subjective

refractions.

     Prior to 1997, as a result of the above difficulties in

diagnosis, petitioner was not able to treat a number of disabled

patients, and petitioner referred those disabled patients to

other optometrists located in distant communities.    In 1996, due

to petitioner’s inability to treat them, approximately 30
                                 - 4 -

disabled patients were referred by petitioner to other

optometrists.

     In 1997, in order to increase petitioner’s ability to treat

disabled patients, petitioner purchased for $12,950 a Humphrey

Instruments automatic refractor/keratometer (automatic

refractor).

     Also in 1997, petitioner purchased for $4,495 a Rush

Ophthalmics height-adjustable rotary instrument stand on which to

place the automatic refractor.    This rotary instrument stand made

the automatic refractor accessible to wheelchair patients.

     Using the automatic refractor and the rotary instrument

stand together petitioner was able to perform “objective”

refractions on all of his patients in order to test their vision

and in order to prescribe corrective lenses without the patients

having to be seated in an examination chair behind a manual

refractor and without having to engage in a series of written

questions and answers.

     While the patients look into the automatic refractor, the

refractor shines a light into the patients’ eyes, takes

measurements, and prints out copies of the patients’

prescriptions.   Using the automatic refractor and the rotary

instrument stand, objective refractions on petitioner’s patients

took about 10 to 15 seconds.
                              - 5 -

     Using the automatic refractor, petitioner was able to test

the vision of some disabled patients whom petitioner would not

have been able to test using a manual refractor.

     In 1997, petitioner’s optometric practice realized gross

receipts of $586,649.

     Petitioners timely filed their 1997 joint Federal income tax

return, with a Form 8826, Disabled Access Credit, on which

petitioners claimed under section 44 a disabled access tax credit

in the amount of $5,000 relating to petitioner’s costs of

purchasing the automatic refractor and the rotary instrument

stand.

     In a notice of deficiency, respondent disallowed

petitioners’ claimed $5,000 disabled access tax credit.


                             OPINION

     The Americans With Disabilities Act of 1990 (ADA), Pub. L.

101-336, sec. 302(a), 104 Stat. 355, codified at 42 U.S.C. sec.

12182(a) (2000), prohibits discrimination against disabled

individuals in the full and equal enjoyment of goods, services,

facilities, privileges, advantages, and accommodations by any

“place of public accommodation”.

     For purposes of ADA, professional offices of health care

providers, such as petitioner’s optometric practice, are included

within the definition of places of public accommodation.

42 U.S.C. sec. 12181(7)(F) (2000).
                                 - 6 -

     With regard particularly to disabled individuals, ADA

regulations provide as follows:


     A health care provider may refer an individual with a
     disability to another [health care] provider, if that
     individual is seeking, or requires, treatment or
     services outside of the referring provider’s area of
     specialization, and if the referring provider would
     make a similar referral for an individual without a
     disability who seeks or requires the same treatment or
     services. A physician who specializes in treating only
     a particular condition cannot refuse to treat an
     individual with a disability for that condition * * *.
     [28 C.F.R. sec. 36.302(b)(2) (2002); emphasis added.]


     In order to comply with the above general ADA prohibition of

discrimination against individuals with disabilities, places of

public accommodation such as petitioner’s optometric practice

are required to make reasonable modifications to their facilities

and procedures that are necessary in order to provide services to

individuals with disabilities.    42 U.S.C. sec.

12182(b)(2)(A)(ii); 28 C.F.R. sec. 36.302(a) (2002).

     Places of public accommodation are required to remove any

physical barriers including communication barriers that are

structural in nature, where such removal is “readily achievable”.

 42 U.S.C. sec. 12182(b)(2)(A)(iv); 28 C.F.R. sec. 36.304(a)

(2002).   “Readily achievable” is defined by ADA as being “easily

accomplishable and able to be carried out without much difficulty

or expense.”   42 U.S.C. sec. 12181(9) (2000).     Factors to be

considered include the following:
                               - 7 -

          (1)   The nature and cost of the action to be
                taken;

          (2)   The financial resources of the place of public
                accommodation, and the effect of the action on its
                expenses and resources; and

          (3)   The type of operations of the place of public
                accommodation, and the impact of the action on its
                operations. Id.


     Cases discussing ADA sec. 302, 104 Stat. 355, 42 U.S.C. sec.

12182(b)(2)(A)(ii), make it clear that determining whether

expenditures and modifications by service providers would be

reasonable constitutes a fact and case specific test.     As

explained in Staron v. McDonald’s Corp., 

, 356 (2d

Cir. 1995):


     the determination of whether a particular modification
     is “reasonable” involves a fact-specific, case-by-case
     inquiry that considers, among other factors, the
     effectiveness of the modification in light of the
     nature of the disability in question and the cost to
     the organization that would implement it. [Citations
     omitted.]


     Section 44(a) provides “eligible small businesses” with a

Federal income tax credit equal to 50 percent of “eligible access

expenditures” exceeding $250 and up to $10,250 (with a maximum

credit of $5,000) which enable the businesses to comply with ADA.

     “Eligible small businesses” are defined as businesses with

gross receipts less than $1 million or with less than 30
                                  - 8 -

employees (and which elect to be treated as such by filing a Form

8826).   Sec. 44(b).

     “Eligible access expenditures” are defined as amounts paid

or incurred by eligible small businesses for the purpose of

complying with ADA, including the following:     (1) Expenditures to

remove architectural, communication, physical, or transportation

barriers preventing the business from being accessible to, or

usable by, individuals with disabilities; and (2) expenditures to

acquire or modify equipment for use by or to benefit individuals

with disabilities.     Sec. 44(c)(2)(A), (D).   Also, to qualify as

eligible access expenditures the expenditures must be reasonable

and necessary.   Sec. 44(c)(3).

     In Fan v. Commissioner, 

, 34-35, 37 (2001), a

disabled access tax credit claimed by a dentist relating to the

cost of an intraoral camera system was disallowed.     The intraoral

camera system included a wand-shaped oral camera that could be

inserted inside patients’ mouths, a monitor, and educational

videotapes, all of which enabled patients to watch the dentist

perform dental work and to watch videos that explained various

diagnoses and treatments.     Id. at 34.

     In Fan, because, prior to purchasing the intraoral camera

system, the dentist was already in compliance with ADA through
                                - 9 -

the use of handwritten notes to communicate with hearing impaired

patients and because the dentist had always been able to treat

disabled patients, we disallowed the claimed disabled access

credit.   Id. at 37-39.   We also noted that the intraoral camera

system had a general applicability and usefulness to all of the

dentist’s patients.   Id. at 34.

     Relying on Fan, respondent argues that prior to purchasing

the automatic refractor and the instrument stand at issue in this

case petitioner already was in compliance with ADA and that

because the automatic refractor and instrument stand had general

applicability and usefulness in treating all of petitioner’s

patients, petitioner should not be entitled to the section 44

disabled access tax credit relating to the cost of purchasing the

equipment.   Respondent also alleges that the automatic refractor

and the instrument stand did not represent reasonable and

necessary expenses of petitioner’s optometric practice.

     Petitioner argues that because the automatic refractor and

the instrument stand enabled him to provide vision testing to

disabled patients for whom petitioner previously had not been

able to provide treatment and whom petitioner previously had

referred elsewhere, petitioner’s purchase of the automatic

refractor and the instrument stand enabled petitioner to comply

with the requirements of ADA, and he should be entitled to the

section 44 disabled access tax credit with respect to the total
                                - 10 -

$17,445 cost of the equipment, subject to the annual credit limit

of $5,000.

     In distinction to the facts involved in Fan v. Commissioner,

supra, prior to purchasing the automatic refractor and the

instrument stand, petitioner herein was not able to provide

vision testing services to some disabled patients.     Petitioner’s

testimony was credible on this point.     During 1997, petitioner’s

optometric practice was the only optometric practice located in a

three-county area in Nevada.

     The fact that the automatic refractor was also used by

petitioner to treat nondisabled patients is not fatal to

petitioner’s entitlement to the disabled access tax credit.     We

find no exclusive use or benefit test in section 44(a).

Certainly, a wheelchair ramp into a restaurant for disabled

access will be used by nondisabled customers of the restaurant,

and nothing in section 44 or the regulations would deprive the

restaurant owner of the disabled access tax credit with regard

thereto.     See 28 C.F.R. sec. 36.304(b)(1) (2002).

     We conclude that petitioner purchased the automatic

refractor and the instrument stand in order to treat disabled

patients and to comply with ADA’s prohibition of discrimination

against disabled individuals.     We also conclude -- in light of

the size of petitioner’s practice compared to the cost of the

equipment, the benefit to his practice, and the benefit to the
                                - 11 -

community -- that petitioner’s purchase of the automatic

refractor and of the instrument stand was reasonable and

necessary.   Petitioner’s costs of the equipment constitute

eligible access expenditures.    See sec. 44(c); 42 U.S.C. sec.

12182(a) and (b)(2)(A)(iii).

     Petitioners are entitled to the claimed $5,000 section 44

disabled access tax credit.

     Based on the foregoing,


                                          Decision will be entered

                                     under Rule 155.