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licenses. Neither Rodgers nor Joyner-Rodgers ever held C.P.A.
licenses.
For the years in issue, petitioner’s employees (including
Rodgers and Joyner-Rodgers) spent all of their work-related time
performing for petitioner’s clients tax return preparation and
bookkeeping services and related administrative and support
services.
On each of petitioner’s timely filed corporate Federal
income tax returns, petitioner’s income tax liability was
calculated using the section 11(b)(1) graduated income tax rates
applicable to corporations.
On April 14, 2005, respondent issued to petitioner a notice
of deficiency in which respondent determined that petitioner’s
tax return preparation and bookkeeping services constituted
accounting services and therefore that petitioner, for the years
in issue, should be treated as a qualified personal service
corporation subject to the flat 35-percent tax rate set forth in
section 11(b)(2). The amounts of the deficiencies herein
represent the increase in petitioner’s Federal income taxes as a
result of applying the flat 35-percent tax rate.1
1 For the years in issue, the 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).
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Last modified: May 25, 2011