- 49 -
qualifications clearly were sufficient to warrant reliance upon
his judgment. Yet without knowing what Shindel understood the
purposes for the accumulations to be and on what information this
understanding was based, we cannot conclude that petitioner
reasonably and in good faith relied on his judgment. Shindel
discussed the accumulated earnings problem with Mohney,
petitioner’s de facto chief executive. Counsel might have
elicited from Shindel and/or Mohney testimony bearing on this
important question. It remains, however, unanswered. Petitioner
could not have underpaid its tax in good faith if, as section
533(a) requires us to presume, petitioner’s management permitted
corporate earnings to accumulate unreasonably in order to defer
shareholder-level withholding tax, and they were aware that this
motive subjected petitioner to liability for the accumulated
earnings tax. Petitioner has not satisfied its burden of proof.
The accuracy-related penalty therefore applies.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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