Ultrasound Services Company Was a Personal Service Corporation

A husband and wife owned a C corporation that provided ultrasound services to medical offices and clinics throughout southern Colorado. For the years at issue, the corporation calculated its tax liabilities at the reduced graduated corporate tax rate of 15%. Upon audit, the IRS argued that the company was a Personal Service Corporation (PSC) and used a 35% tax rate to recalculate its liabilities. The company claimed that it wasn't a PSC because its employees weren't required to be licensed in Colorado, didn't provide direct treatment services to patients, and didn't make healthcare decisions. The Tax Court disagreed, holding that ultrasound services fall within the health profession. Therefore, the company was a PSC for tax purposes. Reza Zia-Ahmadi , TC Summ. Op. 2017-39 (Tax Ct.).


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