- 7 - (iii) the estate of any individual described in clause (i) or (ii), or (iv) any other person who acquired such stock by reason of the death of an individual described in clause (i) or (ii) * * * . To be a qualified personal service corporation, a corporation must satisfy two tests under the regulations: the function test and the ownership test. Sec. 1.448-1T(e)(3), (4), and (5), Temporary Income Tax Regs., 52 Fed. Reg. 22768 (June 16, 1987), as amended by T.D. 8329, 56 Fed. Reg. 485 (Jan. 7, 1997), and T.D. 8514, 58 Fed. Reg. 68299 (Dec. 27, 1993). There is no dispute here that the function test was satisfied because petitioner’s sole activity was the performance of services in the field of law.6 See sec. 1.448-1T(e)(4), Temporary Income Tax Regs., 52 Fed. Reg. 22768 (June 16, 1987), as amended by T.D. 8329, 56 Fed. Reg. 485 (Jan. 7, 1997), and T.D. 8514, 58 Fed. Reg. 68299 (Dec. 27, 1993). Instead, at the center of this dispute is whether petitioner satisfied the ownership test. The ownership test requires that substantially all of the corporation’s stock is held directly by employees performing the corporation’s services, here, in the field of law. Sec. 448(d)(2)(B)(i); sec. 1.448-1T(e)(5)(i)(A), Temporary Income Tax 6 The function test requires that 95 percent or more of corporate employees’ time be spent on providing services in one of the enumerated fields, which include law. See sec. 1.448- 1T(e)(4), Temporary Income Tax Regs., 52 Fed. Reg. 22768 (June 16, 1987), as amended by T.D. 8329, 56 Fed. Reg. 485 (Jan. 7, 1997), and T.D. 8514, 58 Fed. Reg. 68299 (Dec. 27, 1993).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
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