W.W. Eure, M.D., Inc. - Page 5
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part-time temporary radiation therapist. All of petitioner’s
employees devoted their time working for petitioner exclusively
to provide radiation therapy treatment to cancer patients or to
provide administrative, supervisory, or support services for such
radiation therapy treatments.
Petitioner’s Return and the Deficiency Notice
Petitioner timely filed Forms 1120, U.S. Corporation Income
Tax Return, for the years at issue. Petitioner reported that it
was engaged in the practice of medicine and that its taxable
income was subject to the graduated income tax rates for
corporations under section 11(b)(1). Respondent issued
petitioner a deficiency notice in which he determined that
petitioner was a qualified personal service corporation subject
to the flat 35-percent tax rate under section 11(b)(2).3 The
deficiency amounts represent the increase in petitioner’s Federal
income taxes that result from applying the flat 35-percent tax
rate to the amounts of taxable income shown on the returns for
the years at issue. Petitioner timely filed a petition.
We are asked to decide whether petitioner is a qualified
personal service corporation taxed at a flat 35-percent tax rate
under section 11(b)(2) rather than the graduated rates for
3The flat 35-percent tax rate set forth in sec. 11(b)(2)
equals the highest marginal corporate tax rate set forth in sec.
11(b)(1) for the years at issue.
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Last modified: November 10, 2007