Professional/Personal Service Corp.


L

Linda Dorfmont

My client is an engineer and is the sole shareholder of a
professional corporation (C Corp.) He has several employees,
one of which is the office manager, and the others are also
engineers. Some engineering work is contracted out to other
firms and people. Given this situation is the Corporation a
Personal Service Corp or just a professional corp. What is
the difference if any? The corporation has had no taxable
income for many years and has a substantial NOL
carryforward.

Linda Dorfmont E.A., CFP, CSA
 
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M

Mark Rigotti, CPA

Linda Dorfmont said:
My client is an engineer and is the sole shareholder of a
professional corporation (C Corp.) He has several employees,
one of which is the office manager, and the others are also
engineers. Some engineering work is contracted out to other
firms and people. Given this situation is the Corporation a
Personal Service Corp or just a professional corp. What is
the difference if any? The corporation has had no taxable
income for many years and has a substantial NOL
carryforward.

Linda Dorfmont E.A., CFP, CSA
Linda,

I think your mixing apples and oranges here. A professional
corporation is generally a state designation so the
shareholders can not avoid personal malpractice type
liability just because they function as a corporation.
(doctors, lawyers, architects, some engineers, etc.) It's a
protection of the public type issue.

A personal service corporation is an IRS issue - dealing
with tax rates and FYEs, etc.

From your outline I'd say that your client is a PSC and
quite probably a PC.
 

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