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Which personal service corporations are qualified to use the cash method?

Those with at least 95% of their activities in the performance of fields such as health, law, veterinary services, engineering, architecture, accounting, actuarial science, performing arts, or consulting are qualified to use the cash method. Or at least 95% of its stock is owned, directly or indirectly, at all times during the year by employees performing services for the corporation in a previously mentioned field, retired employees who performed in the above services, the estate of either employees mentioned, or any other person who acquired stock because of death of employee in the period of 2 years after death. This is called the ownership test. 

Failure to meet either the function or the ownership test means the corporation must change to the accrual method. 

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