IN 1969 the Internal Revenue Service (IRS) announced that, in response to recent decisions of the Federal courts, is conceding that organizations of physicians, lawyers and other professional people organized under state professional association acts will, generally, be treated as corporations for tax purposes (1). Since many of these professional people were also organized under State professional corporation acts, the reasonable assumption based on the context of the ruling in which this statement appeared is that the Internal Revenue Service also intended to cover organizations established under such acts. On the surface, this decision is a great victory for the taxpaying professionals who in the past have been denied equality of treatment, under the Federal income tax laws, with others who have had the advantage of the corporate form of organization. But, it must be pointed out, this ruling does not entirely close the book on the matter. In the first place, the Government has stated that this decision will hold true generally. It then adds that, obviously, the Government must reserve the right to conclude differently in any case that reflects special circumstances not present in the court decisions (see O'Neill or Kurzner cases) which led to its change of attitude. This statement should serve as a strong warning to all who plan to incorporate to follow carefully the organizational patterns outlined in these two decisions. In addition, the trouble spots stressed in this paper are still pertinent since it may be anticipated that, this ruling notwithstanding, the Internal Revenue Service will not readily relinquish revenue. This attitude will become apparent when the changes made in the Subchapter S provisions by the Tax Reform Act of 1969 are pointed to later in my discussion. In any event, because the trend is toward encouraging the provision of medical care through the group practice of medicine, the decision as to whether to use the corporate form becomes extremely important. In making this decision, some knowledge concerning the history of the controversy may be helpful; but even more important is familiarity with the advantages and disadvantages of incorporation. These matters will be discussed later.