A resurgence of the accumulated earnings tax?

[...]the IRS could view this decrease in corporatelevel tax rates as an incentive for companies to retain their earnings (or place them in unrelated investments) instead of paying dividends to shareholders. Recent petitions before the U.S. Tax Court, as well as the authorsâeuro™own observations, sug...

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Bibliographic Details
Published in:	The Tax Adviser Vol. 53; no. 4; pp. 7 - 10
Main Authors:	Brauer, Eric D, Schneider, Mark A
Format:	Trade Publication Article
Language:	English
Published:	New York American Institute of Certified Public Accountants 01-04-2022
Subjects:	Business plans Closely held corporations Compensation plans Dividend policy Earnings Enforcement Expenditures Income taxes Investments Loans Operating costs Stockholders Tax courts Tax rates Working capital
Online Access:	Get full text
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Summary:	[...]the IRS could view this decrease in corporatelevel tax rates as an incentive for companies to retain their earnings (or place them in unrelated investments) instead of paying dividends to shareholders. Recent petitions before the U.S. Tax Court, as well as the authorsâeuro™own observations, suggest the IRS is indeed stepping up its enforcement efforts with respect to the accumulated earnings tax (see Alta Peruvian Lodge Ltd., No. 22821-21, petition filed Sept. 15,2021, and Ban & В hat Enterprise Inc.,No. 27899-21, petition filed Oct. 22,2021). To demonstrate that its accumulation of earnings is for the needs of the business, the corporation must have specific, definite, and feasible plans for how it intends to utilize its earnings in business operations (see Regs. [...]a corporation must show that it intends to use its earnings for a valid business purpose.
ISSN:	0039-9957