Personal corp

[TAX]

Client, currently C corp (1120), received a notice from IRS:

Business: Providing home health care services.

"Notice of potential Qualification as a Qualified personal services Corporation......."
Tax rate will be 35%

Currently (in 2007) client had a net profit of $125,000.

(1) Should I convert to S corp?

(2) If yes, what happens to profit?

(3) How should I convert from 1120 to 1120s?

I do not know why previous accountant did not opt for "S Corp"?

Thanks!

[les grans]

Well, is it or isn't it?

You seem to be going along with IRS's observation that the corporation should be characterized as a QPSC. Is it? Before you start asking about how to solve the problem, it'd serve you well to figger out whether there's a problem.

Is this corporation a PSC and a QPSC? You've got to a.) know the rules and b.) have the facts.

[TAX]

You seem to be going along with IRS's observation that the corporation should be characterized as a QPSC. Is it? Before you start asking about how to solve the problem, it'd serve you well to figger out whether there's a problem.

Is this corporation a PSC and a QPSC? You've got to a.) know the rules and b.) have the facts.

This corporation is just crop and not PSC or QSPC.

Thank you!