Question

Brief the following case:

Joseph Radtke, S.c., Plaintiff-appellant, v. United States of America, Defendant-appellee, 895 F.2d 1196 (7th Cir. 1990)

https://law.justia.com/cases/federal/appellate-courts/F2/895/1196/46650/

Answer 1

The question presented by this case is whether "dividend" payments made in 1982 by Joseph Radtke, S.C., a Subchapter S corporation, to Milwaukee, Wisconsin, lawyer Joseph Radtke, its sole shareholder-employee, were actually wages subject to Social Security and unemployment taxes under the Federal Insurance Contributions Act (FICA), I.R.C. Secs. 3101-3126, and the Federal Unemployment Tax Act (FUTA), I.R.C. Secs. 3301-3311. The corporation contests the assessment of these employment taxes.

Petitioner Radtke Corporation was incorporated as a small business corporation in 1979 by Joseph Radtke to provide legal services in Milwaukee. He was the firm's sole director and shareholder and its only full-time employee. His annual base salary was $0 through 1982 but he received $18,225 in dividends that year from the corporation. He paid personal income tax on the dividends, and the corporation also declared the $18,225 on its Small Business Corporation income tax return. However, the Radtke corporation did not pay FICA and FUTA taxes for any portion of the $18,225. The Internal Revenue Service deemed the "dividends" to be in the nature of wages and therefore assessed deficiencies against the corporation for failing to pay the FICA and FUTA taxes. The corporation paid $366.44, which was the full amount of the FUTA tax assessment, and also paid $593.75 toward the assessed FICA taxes. After losing its claim for refund, the corporation filed suit in the court below under 28 U.S.C.