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earnings tax is increased $540,044.00, $322,147.00, and
$195,917.00, respectively for the tax years ended
December 31, 1987, December 31, 1988, and December 31,
1989. * * *
The notice of deficiency indicated that respondent computed
NITCO's above 1987, 1988, and 1989 accumulated earnings tax
liabilities as follows:
1987 1988 1989
Taxable income $1,431,283.00 $1,150,524.00 $699,703.00
as adjusted
Less dividends 0.00 0.00 0.00
Current earning 1,431,283.00 1,150,524.00 699,703.00
and profits retained
Accumulated earnings
Credit
1. Minimum 250,000.00 -- 250,000.00
accumulated
earnings allowed
2. Less (6,240,031.45) (7,800,101.00) (9,266,900.00)
accumulated
earnings as of the
close of the preceding
taxable year
3. Reduced by dividends 0.00 0.00 0.00
considered paid during
preceding taxable year
4. Allowable credit 0.00 0.00 0.00
5. Current earnings and 0.00 0.00 0.00
profits determined to be
retained for reasonable
needs of the business
6. Less: deduction for 0.00 -- --
long-term capital gains
7. Allowable credit under 0.00 0.00 0.00
IRC sec. 535(c)(1)
Accumulated earnings credit 0.00 0.00 0.00
(greater of item 4 or item 7)
Accumulated taxable $1,431,283.00 $1,150,524.00 $699,703.00
income subject to tax
Tax on accumulated 540,044.00 322,147.00 195,916.84
earnings
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