- 20 - made by the corporation. Thomas A. Curtis, M.D., Inc. v. Commissioner, 67 T.C.M. (CCH) 1958, 1963 (1994) [T.C. Memo. 1994-15]; LaMastro v. Commissioner, 72 T.C. 337, 384 (1979). The Tax Court in LaMastro, relying on Bianchi v. Commissioner, 66 T.C. 324 (1976), aff’d. per curium [sic], 553 F.2d 93 (2nd Cir. 1977), held that the best evidence of the value of a dentist’s personal services is the profit derived from the practice. Id. at 383. In Bianchi v. Commissioner, supra at 333, we held that it is proper to examine the prior self-employment earnings of a corporate employee to determine whether compensation currently paid to such employee by the corporation is reasonable. In Bianchi, the corporate employee, a dentist, had incorporated his individual proprietorship, transferring to the corporation (which elected status as an S corporation) the equipment previously used in the proprietorship, accounts receivable, and good will. See id. at 325. In determining what would be reasonable compensation for his services provided to the corporation, we said: “It cannot be questioned that the clearest evidence of the worth of petitioner’s services is petitioner’s earnings from his dentistry practice as an individual proprietor.” Id. at 333. It is clear that, in referring to “petitioner’s earnings”, we were referring to the profit earned by the dentist as an individual proprietor. Indeed, we restated our point as follows: “[T]he best evidence of the value of his personal services is profit he derived from his own practice.” Id. at 335 (emphasis added). Undoubtedly, we were using the termPage: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
Last modified: May 25, 2011