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the type of engineering service rendered. Although the invoices
reflect a mix of work, both geotechnical and engineering
services, we can reasonably distinguish, by use of the account
numbers, the proportionate time spent in engineering and
geotechnical testing. We find petitioner spent more than 5
percent of its time on geotechnical services. Since geotechnical
testing is separate and distinct from the field of engineering,
petitioner does not meet the function test as required under
section 448(d)(2). In our review and analysis of Exhibits 7
through 11,4 it is reasonable to conclude that 95 percent of
petitioner’s time was not devoted in the field of engineering or
incident to the field of engineering.
We find petitioner is not a qualified personal service
corporation under section 448(d)(2), and therefore not subject to
the 35-percent flat tax rate.
4 Exhibit 7 is a Record of Invoices Billed from June 30, 1994,
through Dec. 31, 1994.
Exhibit 8 is a Record of Invoice Billed from Jan. 4, 1995,
through Dec. 31, 1995.
Exhibit 9 is a Record of Invoice Billed from Jan. 4, 1996,
through July 17, 1996.
Exhibit 10 is a sample of petitioner’s invoices dated
throughout the years in issue, showing the account numbers for
services rendered.
Exhibit 11 is a breakdown of sales totals from July 1994
through June 1995, and also from July 1995 through June 1996.
This summary is based upon the account numbers petitioner
followed in bookkeeping. This exhibit also includes the job
descriptions associated with account numbers.
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