Ron Lykins, Inc. - Page 6

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          another of the professions snagged in the QPSC net:                         
              only if 95 percent or more of the time spent by                        
               employees of the corporation, serving in their capacity                
               as such, is devoted to the performance of services in a                
               qualifying field.  For purposes of determining whether                 
               this 95 percent test is satisfied, the performance of                  
               any activity incident to the actual performance of                     
               services in a qualifying field is considered the                       
               performance of services in that field.  Activities                     
               incident to the performance of services in a qualifying                
               field include the supervision of employees engaged in                  
               directly providing services to clients, and the                        
               performance of administrative and support services                     
               incident to such activities. * * *                                     
          Sec. 1.448-1T(e)(4)(i), Temporary Income Tax Regs, 52 Fed. Reg.             
          22766 (June 16, 1987) (emphasis added).                                     
               Lykins’s decision to split his business thus threatens to              
          ensnare him:  The Code itself lists “accounting” as one of the              
          qualifying fields, and the regulations carefully distinguish                
          investment advice sold for a fee from investment advice sold                
          incident to a brokerage service producing commissions.4  Lykins             
          Financial, whose income was entirely in the form of commissions             
          was not, under the regulation, selling services in a qualifying             
          field.  Lykins Inc. was.                                                    
               The Commissioner argues that when Lykins Inc. hived off its            
          investment business from its accounting services, it necessarily            
          left behind only the qualifying field of accounting.  He asserts            
          that if employees generated commission income, they were Lykins             


               4 Sec. 1.448-1T(3)(4)(iv)(B), Examples (4),(5),(10),                   
          Temporary Income Tax Regs. 22767 (June 16, 1987).                           





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