- 4 - determined a corrected tax liability of $13,135 and a deficiency of $7,506 in petitioner’s 2002 Federal corporate income tax. In response to the notice of deficiency, petitioner timely filed a petition with this Court. OPINION I. Applicable Code Sections and Regulations Section 11(a) imposes a tax on the taxable income of every corporation. Section 11(b)(1) provides graduated tax rates generally applicable to corporations. However, section 11(b)(2) provides: “Notwithstanding paragraph (1), the amount of the tax imposed by subsection (a) on the taxable income of a qualified personal service corporation (as defined in section 448(d)(2)) shall be equal to 35 percent of the taxable income.” A corporation is a qualified personal service corporation if it meets both the “function test” and the “ownership test” of section 448(d)(2). See sec. 1.448-1T(e)(3), Temporary Income Tax Regs., 52 Fed. Reg. 22768 (June 16, 1987). Under the function test, “substantially all of the activities [of the corporation must] * * * involve the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting”. Sec. 448(d)(2)(A) (emphasis added). Section 1.448-1T(e)(4)(i), Temporary Income Tax Regs., supra, further describes the function test: A corporation meets the function test if substantially all the corporation’s activities for a taxable yearPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 NextLast modified: November 10, 2007