§532 — Corporations subject to accumulated earnings tax

31 cases·4 followed·1 distinguished·1 overruled·25 cited—13% support

Statute Text — 26 U.S.C. §532

(a)General rule

The accumulated earnings tax imposed by section 531 shall apply to every corporation (other than those described in subsection (b)) formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.

(b)Exceptions

The accumulated earnings tax imposed by section 531 shall not apply to—

(1)

a personal holding company (as defined in section 542),

(2)

a corporation exempt from tax under subchapter F (section 501 and following), or

(3)

a passive foreign investment company (as defined in section 1297).

(c)Application determined without regard to number of shareholders

The application of this part to a corporation shall be determined without regard to the number of shareholders of such corporation.

Treasury Regulations

Treas. Reg. §Treas. Reg. §1.532-1 Corporations subject to accumulated earnings tax
Treas. Reg. §Treas. Reg. §1.532-1(a) General rule.
Treas. Reg. §Treas. Reg. §1.532-1(b) Exceptions.
Treas. Reg. §Treas. Reg. §1.532-1(c) Foreign corporations.

31 Citing Cases

Knight Furniture Co., Inc., Petitioner T.C. Memo. 2001-19 · 2001

The sole issue for decision is whether, for each of the years in issue, petitioner was a corporation described in section 532, i.e., a corporation availed of for the purpose of avoiding income tax with respect to - 2 - its shareholders, by permitting its earnings and profits to accumulate rather than to be divided and distributed, and was thus liable for the accumulated earnings tax imposed by section 531.

Doug-Long, Inc. v. Commissioner 72 T.C. 158 · 1979

Section 533(a) provides: For purposes of section 532, the fact that the earnings and profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid the income tax with respect to shareholders, unless the corporation by the preponderance of the evidence shall prove to the contrary.

United States v. Jane Boyd 991 F.3d 1077 · Cir.

Atlantic Properties, Inc. v. Commissioner 62 T.C. 644 · 1974

Snow Manufacturing Co. v. Commissioner 86 T.C. 260 · 1986

GPD, Inc. v. Commissioner 60 T.C. 480 · 1973

Magic Mart, Inc. v. Commissioner 51 T.C. 775 · 1969

Electric Regulator Corp. v. Commissioner 40 T.C. 757 · 1963

Technalysis Corp. v. Commissioner 101 T.C. 397 · 1993

Chaney & Hope, Inc. v. Commissioner 80 T.C. 263 · 1983

Thompson Engineering Co. v. Commissioner 80 T.C. 672 · 1983

Gottesman & Co. v. Commissioner 77 T.C. 1149 · 1981

Estate of Lucas v. Commissioner 71 T.C. 838 · 1979

H. C. Cockrell Warehouse Corp. v. Commissioner 71 T.C. 1036 · 1979

Capital Sales, Inc. v. Commissioner 71 T.C. 416 · 1978

Atlas Tool Co. v. Commissioner 70 T.C. 86 · 1978

Ready Paving & Construction Co. v. Commissioner 61 T.C. 826 · 1974

Alex Brown, Inc. v. Commissioner 60 T.C. 364 · 1973

Golconda Mining Corp. v. Commissioner 58 T.C. 139 · 1972

Montgomery Co. v. Commissioner 54 T.C. 986 · 1970

Novelart Manufacturing Co. v. Commissioner 52 T.C. 794 · 1969

Estelle Morris Trusts Nos. 401 through 410 v. Commissioner 51 T.C. 20 · 1968

Rhombar Co. v. Commissioner 47 T.C. 75 · 1966

John P. Scripps Newspapers v. Commissioner 44 T.C. 453 · 1965

Bremerton Sun Publishing Co. v. Commissioner 44 T.C. 566 · 1965

Sandy Estate Co. v. Commissioner 43 T.C. 361 · 1964

Nemours Corp. v. Commissioner 38 T.C. 585 · 1962

I. A. Dress Co. v. Commissioner 32 T.C. 93 · 1959

Pelton Steel Casting Co. v. Commissioner 28 T.C. 153 · 1957

Lattera v. Commissioner IRS · Cir.

George Lattera Angeline Lattera v. Commissioner of Internal Revenue 437 F.3d 399 · Cir.

§532 — Corporations subject to accumulated earnings tax

31 Citing Cases

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