Dennis Katz, D.D.S., P.C. - Page 2

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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                          
                                  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            
               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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