JOHN DOLAN: (Voiceover) Well, I think you need to understand this with a little historical perspective. Originally, people, if they had an office in their home, would take a home-office deduction; pretty understandable. In the late '70s, the Congress did a tax reform act, one of the many they do from time to time. And in this tax reform act, they said, `You can still take the home-office deduction, but only if this home office is your principal place of business.'

Your principal place of business is evaluated based on a couple criteria that are given in the case. First of all, what's the relative importance of what you do at home in this home office compared to what you do outside the home office? And if you think about what an anesthesiologist does, this is a problematic situation for taking the deduction, because even though he reads medical journals and talks to other doctors, and does a little bit of paperwork and all of his billing from this home office, his real work, administering anesthesia, is done in a hospital.

HOST: What about other small-business owners, like what about salespeople? Should they be nervous about this?

JOHN: I think salespeople should be awfully concerned about this. Most salespeople that would have a home office would actually do their real work face-to-face.

HOST: What if I'm in this position: What if I'm not sure whether I qualify or not? Now give me your best advice. Should I risk the deduction or should I not take the deduction?

JOHN: If I had to give you a one-word answer, it would be no. Don't take the deduction.

HOST: Really? Why so?

JOHN: Well, because you're not saving that much.

HOST: Really?

JOHN: I mean, if you have a huge home and a huge mortgage and you're real worried that you're gonna be paying a lot more taxes, go to a tax attorney, go to an accountant and get an opinion that would make you feel more comfortable. But the average person is not deducting that much and the tax savings is not that much so that it really is a pretty big risk for the reward that you get.