Being paid on a "per client" basis is similar to a commission. And if your company does other things, such as scheduling appointments or billing, those are "services". All of that points to that it should be 'ordinary' income, reported with all of your other income, not as a rental of real estate.

Critter-3

Bottom line ... on an 1120-S the profit is what is passed thru to the owner on the K-1. Where you enter the income in the income section really makes no difference. What is much more important is that the owner take a reasonable wage and issues themselves a W-2.

A

AmeliesUncle

Disagree. Rental of real estate would be passive income, which is treated differently but can likely avoid to adding to the "reasonable compensation". But this situation is most likely is general income, but that also needs to be factored into coming up with "reasonable compensation".

As a side note, between it being a medical clinic and a corporation, the Original Poster REALLY, REALLY needs to be going to a tax professional. It would be foolish for them to be doing it themselves. You wouldn't recommend a tax professional to be performing his own medical treatments, would you?