Dennis Katz, D.D.S., P.C. - Page 6

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                         (B) in the case of periods after December 31,                
                    1978, all Federal tax returns (including information              
                    returns) required to be filed by the taxpayer with                
                    respect to such individual for such period are filed on           
                    a basis consistent with the taxpayer’s treatment of               
                    such individual as not being an employee,                         
               then, for purposes of applying such taxes for such period              
               with respect to the taxpayer, the individual shall be deemed           
               not to be an employee unless the taxpayer had no reasonable            
               basis for not treating such individual as an employee.                 
               Under section 530(a) there are two separate questions–-viz,            
          whether the corporation filed all the returns required to be                
          filed, and second whether the corporation had a reasonable basis            
          for not treating Dr. Katz as an employee.                                   
               With regard to the first question, section 6041(a) requires,           
          inter alia, that                                                            
               All persons engaged in a trade or business and making                  
               payment in the course of such trade or business to another             
               person, of * * * compensations * * * of $600 or more in any            
               taxable year * * * shall render a true and accurate return             
               to the Secretary, under such regulations * * * as may be               
               prescribed by the Secretary, setting forth the amount of               
               such * * * income, and the name and address of the recipient           
               of such payment.                                                       
          The term “person” includes corporations.  Sec. 7701(a)(1).                  
          Furthermore, under the regulations, petitioner was required to              
          file a Form 1099 reflecting the compensation paid to Dr. Katz.              
          Sec. 1.6041-1(a)(2), Income Tax Regs.  Petitioner does not seem             
          to dispute that, if its corporate entity is recognized, it was              
          required to file Forms 1099.  In all events, if the corporate               
          entity is recognized, consistent with the Court of Federal                  
          Claims, we hold that petitioner would have been required to file            

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