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all of the activities of which involve the performance of
services in the fields of * * * architecture.” In this case,
petitioner and respondent agree that petitioner’s business
satisfies the function test. With regard to the ownership test,
respondent contends that petitioner also satisfies the ownership
test; petitioner disagrees.
Section 448(d)(2)(B) defines the ownership test as where:
(B) substantially all of the stock of which (by
value) is held directly * * * by–
(i) employees performing services for
such corporation in connection with the
activities involving a field referred to in
subparagraph (A)
In interpreting the ownership test of section 448(d)(2)(B),
section 1.448-1T(e)(5)(i), 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), further provides:
A corporation meets the ownership test, if at all
times during the taxable year, substantially all of
the corporation’s stock, by value, is held, directly
or indirectly, by–
(A) Employees performing services for
such corporation in connection with
activities involving a field referred to in
paragraph (e)(4) of this section,
* * * * * * *
For purposes of this paragraph (e)(5), the term
“substantially all” means an amount equal to or
greater than 95 percent.
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Last modified: November 10, 2007