- 45 - extension of the statute for purposes of audit. In our view, the time pressure you face for the year 1987 is the product of your (or your supervisor's) decision to open 1987 with so little time remaining on the statute. Respondent subsequently notified NITCO of the proposed determination against NITCO with respect to accumulated earnings tax liability for 1987, 1988, and 1989. NITCO chose not to respond and did not file a statement concerning the grounds on which it relied to establish that its earnings were accumulated to meet its reasonable business needs.8 In April 1991, respondent issued respective notices of deficiency to Mr. and Mrs. Mussman for 1988 and 1989, and to NITCO for 1987, 1988, and 1989. With respect to the accumulated earnings tax liability asserted against NITCO, the notice of deficiency issued to NITCO stated, in pertinent part: 10(b.) Section 531 Tax It is determined that you were availed of for the purpose of avoiding the income tax with respect to your shareholders by permitting earnings and profits to accumulate instead of being divided or distributed during the taxable years 1987, 1988, and 1989. Accordingly, the accumulated earnings tax provided by Section 531 of the Internal Revenue Code is being asserted for 1987, 1988, and 1989. In determining your accumulated earnings credit under the provisions of section 535 of the Internal Revenue Code, your failure or refusal to respond to the notification sent to you by certified mail on January 15, 1991 pursuant to [section] 534(b) explaining the capital needs of your business has been considered. Therefore, accumulated 8As a result, in the instant cases, NITCO has the burden of proof in establishing that it is not liable for the accumulated earnings tax liabilities determined against it by respondent in the notice of deficiency. See sec. 534(a)(2).Page: Previous 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Next
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