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it a “qualified personal services corporation.” If he is right,
the Code would tax Lykins Inc. at a flat rate of 35 percent; if
he isn't, its rate would be lower.
Background
Ronald Lykins is a well-educated man, with an M.B.A. and
Ph.D.; he is also a C.P.A. He started preparing tax returns in
1969 to supplement his income, and when he opened an accounting
practice it quickly came to focus on tax preparation and advice.
His clients began trusting him for financial and investment
advice as well, and his business steadily grew. He incorporated
it as Ron Lykins, Inc. in 1980, and Lykins Inc. has ever since
filed tax returns as a Subchapter C corporation. The financial
and investment services side of the business took more and more
of his time, and Lykins was advised by his lawyer that it would
make sense for him to segregate the tax preparation side of the
business from the investment advice side--should Lykins wish to
retire, he was told, he would be able to market his businesses to
a wider variety of buyers if they were separate.
In 2000, he took that advice and formed Lykins Financial
Group, LLC, a limited liability company under Ohio law. Lykins
Inc. continued to offer tax services, but Lykins Financial now
began offering all the financial and investment services. Lykins
himself was the sole owner of both companies. Fully separating
the companies proved difficult. Segregating their income was
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Last modified: May 25, 2011