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was not entitled to relief from employment tax liability under
section 530 of the Revenue Act of 1978, Pub. L. 95-600, 92 Stat.
2885 (hereinafter section 530). On August 7, 2000, petitioner
filed a timely petition for review of respondent’s
determinations.
FINDINGS OF FACT
The facts are essentially undisputed and may be summarized
as follows. Petitioner is a professional corporation organized
pursuant to the laws of the Commonwealth of Virginia in 1971 for
the purpose of rendering “professional services as a practitioner
in the field of dentistry.” At the time the petition was filed,
petitioner’s principal place of business was located in Hampton,
Virginia. Dennis Katz (Dr. Katz) is a licensed dentist, and his
wife, Karen (Mrs. Katz), is a dental hygienist. Dr. Katz was and
is the sole shareholder of the petitioner’s stock and he was and
is the president. Mrs. Katz was and is the corporate secretary.
Petitioner could only operate its dental practice through its
duly licensed dentist, Dr. Katz. From 1977 through 1997, Dr.
Katz did not work for any other dentist or have any other dental
practice.
In 1981, petitioner and Dr. Katz entered into a management
agreement whereby Dr. Katz agreed to provide dental services for
and to manage the corporation. This agreement remained in effect
during the years 1996 and 1997. During these years, Dr. Katz
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