Rainbow Tax Service, Inc. - Page 7

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               Petitioner, however, argues that, for purposes of section              
          448(d)(2)(A), tax return preparation and bookkeeping services do            
          not constitute accounting services, that petitioner therefore               
          does not meet the above function test, and that petitioner should           
          not be treated as a qualified personal service corporation.                 
               Petitioner argues that under Nevada law, accounting                    
          services can be performed only by C.P.A.s, and that because                 
          petitioner is not a C.P.A. firm, does not employ C.P.A.s, and               
          does not perform services which are restricted under Nevada law             
          to C.P.A.s, petitioner should not be treated as performing                  
          accounting services.                                                        
               In essence, petitioner would treat only those services which           
          require a C.P.A. license as accounting services and would treat             
          other tax return preparation and bookkeeping services as                    
          nonaccounting services.                                                     
               We disagree with petitioner’s overly restrictive definition            
          of accounting services.                                                     
               Petitioner fails to appreciate the distinction between                 
          “public accounting” and “accounting”.  Public accounting, which             
          generally consists of the preparation and/or audit of financial             
          statements, and generally requires a C.P.A. license, represents a           
          branch of accounting, not the entire realm of accounting.  See              
          Weygandt, et al., Accounting Principles, 6-9 (3d ed. 1993).                 

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