Brief Look at the Advantages and Disadvantages of Professional Incorporation, A

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Weinberg, M. H.

Issue Date

1973

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INTRODUCTION|Corporations are rapidly becoming a more popular organizational vehicle for medical, dental, veterinary, and legal group practices. Even though a large majority of professionals continue to operate in partnership form, the trend seems to indicate a definite surge toward incorporation. Obviously, the prudent practitioner should study the advantages and disadvantages of incorporation, so as to avail himself of the most advantageous mode of business operation. |The corporate form of organization has become more prevalent for two basic reasons. First, the number of states permitting the incorporation of professional practices has increased dramatically in the last three years. In fact, with the passage of a Professional Service Corporation Act by Wyoming, all fifty states now have on their books authority for professional persons to incorporate. |Secondly, the Internal Revenue Service (Service) originally challenged professional corporations on the basis that they did not represent valid corporate entities. Taxpayers, however, were consistently successful in appealing such cases, and, as a result, the Service announced in August, 1969, that professional corporations would be recognized as valid entities for income tax purposes. Following this, in March of 1970, the Service issued a published revenue ruling which enumerated the states where professional corporation laws were acceptable., Eight revenue rulings followed, approving corporate status for associations, limited partnerships,...

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6 Creighton L. Rev. 17 (1972-1973)

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Creighton University School of Law

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