W.W. Eure, M.D., Inc. - Page 6

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          corporations under section 11(b)(1).  A qualified personal                  
          service corporation is any corporation that satisfies a function            
          test and an ownership test.4  Sec. 448(d)(2)(A) and (B)(i); 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, 1991), and T.D. 8514, 58 Fed. Reg. 68299 (Dec. 27,             
          1993).  Petitioner argues that it is not a personal service                 
          corporation because it fails to satisfy the function test.  We              
               To meet the function test, 95 percent or more of corporate             
          employees’ time must be spent providing services in one of                  
          several enumerated fields, including health.  See Rainbow Tax               
          Serv., Inc. v. Commissioner, 128 T.C. ____ (2007); sec. 1.448-              
          1T(e)(4)(i), Temporary Income Tax Regs., supra.  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 for purposes of determining whether the function test            
          is satisfied.  Sec. 1.448-1T(e)(4)(i), Temporary Income Tax                 
          Regs., supra.  Activities incident to the performance of services           
          in a qualifying field include the supervision of employees                  
          engaged in directly providing services to clients and performing            

               4Petitioner concedes that it satisfies the ownership test              
          because Dr. Eure, one of its employees, directly owned all of               
          petitioner’s stock.                                                         

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