Personal Service Corporation


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Personal Service Corporation

A corporation in which employee-owners perform services helpful to individuals, such as accounting, health care, or performing arts. In order to qualify as a personal service corporation for tax purposes, the employees must own at least 10% of the fair market value of the company's stock and the company must have been engaged in the principal business of a personal service on the last day of the previous tax year or the last day of the calendar year of the company's tax year.
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11] Related parties include a personal service corporation as defined under the calendar year, requirement and any employee-owner however small.
469(a) States that any individual, estate, trust, closely held corporation and personal service corporation will have all passive activity loss and passive activity tax credits disallowed for any taxable year.
The IRS determined that it was a personal service corporation because Temp.
Observation: As long as the courts adhere to the employee test used in Leavell in which, a personal guarantee (a standard operating procedure) is executed, it will be virtually impossible to assign income to a personal service corporation.
Surprisingly, a personal service corporation is defined differently in each case.
9) Despite this artful drafting, personal service corporations may be vulnerable to IRS attack under [section] 482 (e.
Personal service corporations, S-corporations and C-corporations with gross receipts of less than $5 million also can use the cash method of accounting.
As was discussed in the October 1989 SURVEY OF CURRENT BUSINESS, lump-sum payments by personal service corporations to their owner-employees (doctors, lawyers, etc.
Hence, limitations would not apply to employees of a partnership who perform services substantially identical to those performed by corporate executives at a competing firm, nor would they apply to non-executive employees or to employee-owners of personal service corporations.
In the services industry, the size and timing of bonus payments by personal service corporations to their owner-employees (doctors, lawyers, etc.
A personal service activity is one in any of eight fields also specified as those of personal service corporations subject to a 35% flat corporate income tax rate in section 448(d)(2): health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting, with the addition of "any other trade or business in which capital is not a material income-producing factor.