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Is a One-Person Corporation
Required
to have an Employee?
In Rev. Rul. 71-86, 1971-1 C.B. 285, an individual
was the president and sole shareholder of a corporation. The individual
fixed his own salary, hours and duties and was not responsible to anyone
else. The individual was held to be an employee of the corporation even
thought the corporation was closely held and the individual was in charge
of its activities. These factors were considered immaterial, because
the individual’s services were material to the operation of the
corporation and he was entitled to and received remuneration for his
services from the corporation. Thus, the individual fell within the
definition of an officer/employee set forth in section 31.3121(d)-1(b)
of the regulations.
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