Sargent v. Commissioner
United States Court of Appeals for the Eighth Circuit
929 F.2d 1252 (1991)
Professional hockey players Sargent and Christoff (plaintiffs) each formed personal service corporations that contracted with the Minnesota North Stars for the right to have the players play for the team, with the corporations in turn paying the players a salary and making pension contributions on their behalf. The IRS (defendant) disallowed the pension-contribution deductions and sought to tax the players directly on the full amounts the North Stars paid their corporations, and the Tax Court agreed with the IRS.
Whether income for personal services is attributable to a personal service corporation, rather than the individual, when the corporation has the contractual right to control the person's activities and a contract with the recipient of the services acknowledges that control.