- 6 -
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
disagree.
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.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: November 10, 2007