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NOTES 903 Tax Lawyer, Vol. 55, No. 3 NOTE WHEN COMPENSATION PAID AS SALARY TO SHAREHOLDER EMPLOYEES OF PERSONAL SERVICE CORPORATIONS IS TREATED AS DIVIDENDS: PEDIATRIC SURGICAL ASSOCIATES, P.C. V. COMMISSIONER In Pediatric Surgical Associates, P.C. v. Commissioner,1 the Tax Court held that a portion of a personal service corporation’s payments to its shareholder employees was a dividend and not deductible compensation. The court reasoned, in effect, that where a personal service corporation...

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