This case involves accounting malpractice. The plaintiff, a large, multinational “S-Corporation,” manufactured automobile parts. The plaintiff hired the defendant, one of the country’s premier CPA firms, to perform accounting and consulting services. Specifically, the defendant was responsible for assisting the plaintiff in retaining its tax status as a sub-chapter “S-Corporation”, which included computing the plaintiff’s passive investment income, as defined by the Internal Revenue Code. The plaintiff’s status as a sub-chapter S corporation would be dismissed if their passive investment income exceeded a specified percentage of its gross receipts for three consecutive taxable years. If it was too high, the defendant was to advise the plaintiff to move its investments to those that would classify as non-passive investment income. For three consecutive years, the defendant provided services to the plaintiff and “under-calculated” their passive investment income. Thus, the defendant did not advise the plaintiff to shift its investments elsewhere. After the third consecutive year, the plaintiff was contacted by the IRS, who notified the plaintiff that its status as a sub-chapter “S-Corporation” was dismissed. The plaintiff then commenced a suit against the accounting firm for negligent accounting practices.