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without published opinion 747 F.2d 1463 (5th Cir. 1984).
Accordingly, “Apart from certain situations permitting the
lifting of the corporate veil, the corporate entity and the legal
consequences flowing therefrom are controlling.” Amorient, Inc.
v. Commissioner, 103 T.C. 161, 169 (1994). In view of these
fundamental principles, courts have consistently required
shareholders to treat income received as passthroughs from their
S corporations as distinct from income the same shareholders
received for providing personal services to their corporations.
This requirement applies even though the shareholders, and not
their corporations, are liable for their pro rata shares of
corporate income on their individual income tax returns. See,
e.g., Durando v. United States, supra (passthrough income from an
S corporation is not net earnings from self-employment for
purpose of computing Keogh plan deductions); Crook v.
Commissioner, supra (passthrough income of S corporation is
dividend income, not wages or salary, to its shareholders for
purposes of investment interest deductions); Ding v.
Commissioner, T.C. Memo. 1997-435 (for purposes of self-
employment tax, passthrough losses from an S corporation cannot
be used to reduce shareholder's self-employment income paid by
the corporation). As the Court of Appeals for the Ninth Circuit
has explained, it is improper
to treat income earned by a corporation through its
trade or business as though it were earned directly by
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