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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).
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