In that case, two hockey players formed personal service corporations
, which signed contracts with the teams they played for, and, in turn, the corporations paid the players' salaries and contributed to pension plans for them.
The passive activity rules apply to individuals, estates, trusts (other than grantor trusts), personal service corporations
, and closely held corporations as well as to the owners of grantor trusts, partnerships, and S corporations.
Treasury Department, worry about the possibility that health insurers could try to avoid having to comply with the deduction limit by "encouraging employees and independent contractors who are natural persons to form small or single-member personal service corporations
or other similar entities to provide services that are historically provided by natural persons," officials said.
The IRS recently released guidance warning that trusts, estates, and personal service corporations
engaged in the real property business cannot meet the qualifying tests of IRC Section 469(c)(7)(B), because that test applies only to individuals capable of performing personal services.
It applies to individuals, estates, trusts, closely held C corporations, and personal service corporations
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.
Certain personal service corporations
are taxed at a flat rate of 35%.
This figure is reduced to $150,000 for personal service corporations
, whose principal business consists of the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.
S Corporations and Personal Service Corporations
(PSCs) must generally use a calendar year or a 52-53-week tax year ending with reference to the calendar year or must establish a business purpose for a different tax year.
9) Despite this artful drafting, personal service corporations
may be vulnerable to IRS attack under [section] 482 (e.
The 2007/2008 Budget Act includes a provision for tax abuse involving personal service corporations
or S corporations.
dagger]) Personal Service Corporations
are taxed at a flat rate of