Accumulated Earnings Tax


Also found in: Financial.

Accumulated Earnings Tax

A special tax imposed on corporations that accumulate (rather than distribute via dividends) their earnings beyond the reasonable needs of the business. The accumulated earnings tax is imposed on accumulated taxable income in addition to the corporate Income Tax.

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A particularly suitable analogy can be found in the accumulated earnings tax rules.
Questions cover 21 topics, including shareholder-related issues, determination of corporate income tax liability, tax accounting and procedure, judicial doctrines, earnings and profits, constructive dividends, stock distributions, redemptions, bootstrap sales, accumulated earnings tax, complete liquidations, partnerships, comparison of entities, and Sections 351, 304, and 305.
Moreover, there appears to be little possibility that the accumulated earnings tax would apply to the retained earnings of the U.
To encourage corporations to pay dividends rather than accumulating earnings and allowing shareholders to avoid income taxes, the accumulated earnings tax imposes a penalty tax on earnings accumulated beyond the reasonable needs of a business under IRC section 531.
the potential imposition of penalty taxes, such as the accumulated earnings tax applicable to corporations that retain earnings in excess of the reasonable needs of the business
Discuss tax issues related to the construction industry, including current regulations and issuances; bonus depreciation and capitalization issues; accounting method selection and change; and reasonable compensation and accumulated earnings tax.
This article explores planning opportunities and defense strategies for corporations potentially exposed to the accumulated earnings tax.
Chapter 7 covers the determination of consolidated tax liability, delving into areas such as the alternative minimum tax, the personal holding company tax, and the accumulated earnings tax.
A savings account within a corporation in anticipation of such an event may create accumulated earnings tax problems, and if the business is not a corporation, it may be difficult to save.
Like the accumulated earnings tax, the tax on "Undistributed Personal Holding Company Income" is designed to encourage dividend distributions by C Corporations.
Another piece of good news we recently received," Altman said, "is that the IRS has decided to drop its appeal concerning the Accumulated Earnings Tax for the years 1983 through 1985.
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