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The principal issue presented is whether the petitioner
corporation's $171,476 "employer reversion", section
4980(c)(2)(A), which is concededly includable in its gross
income, may be offset by a section 162(a)(1) deduction in the
same amount for compensation paid to its sole stockholder-
employee. The facts have been stipulated.
In 1981, Theodore Souris, an attorney, was a partner in the
Detroit, Michigan, law firm of Bodman, Longley & Dahling. On
April 16, 1981, petitioner Theodore Souris, P.C., was
incorporated under the laws of Michigan. It was wholly owned by
Mr. Souris. Also on that day, Mr. Souris assigned his
partnership interest to petitioner corporation (the corporation
or the P.C.), and the law firm consented to its admission as a
partner in substitution for Mr. Souris. An appendix to the
partnership agreement sets forth special provisions regarding
professional corporations as partners. Among other things, the
appendix provides that no one other than the individual attorney
"shall at any time be a stockholder, director, officer or lawyer
employee of the professional corporation", that "the professional
corporation shall be entitled, without deduction, to all the
receipts of the individual attorney," and that "the individual
attorney shall guarantee to the Firm that the professional
1(...continued)
the Internal Revenue Code in effect for the year at issue.
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