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“who provide services to an S corporation can be treated like
employees and covered by that corporation’s retirement plan.”
Durando v. United States, supra at 551. In sum, the Durando case
does not provide a reasonable basis for not treating Dr. Sadanaga
as an employee.
Petitioner also relies on Rev. Rul. 59-221, 1959-1 C.B. 225.
Rev. Rul. 59-221, supra, holds that where a small business
corporation elects under section 1372 not to be subject to Federal
income tax, the amount of its income required to be included in
each shareholder’s gross income does not constitute “net earnings
from self-employment” to such shareholders for purposes of the
Self-Employment Contributions Act. That ruling, like the Durando
case, deals solely with whether amounts a shareholder receives are
derived from a trade or business carried on by the shareholder. In
the case at hand, the issue is whether an officer is an employee of
a corporation. Rev. Rul. 59-221, supra, makes no mention of either
corporate officers or their Federal employment tax status.
Therefore, the ruling does not provide a reasonable basis for
treating Dr. Sadanaga other than as an employee.
Petitioner attempts to distinguish the facts in this case from
cases holding that officers who performed substantial services for
an S corporation are employees for purposes of Federal employment
taxes. In Spicer Accounting, Inc. v. United States, 918 F.2d 90
(9th Cir. 1990), and Radtke v. United States, 895 F.2d 1196 (7th
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