Northwestern Indiana Telephone Company - Page 50

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            the business does so with the purpose of avoiding income tax with                          
            respect to its shareholders.                                                               
                  The presumption can be rebutted by a preponderance of                                
            evidence to the contrary.  Sec. 533(a); Snow Manufacturing Co. v.                          
            Commissioner, supra at 269.  Therefore, the accumulated earnings                           
            tax does not apply if a corporation has allowed an unreasonable                            
            accumulation but lacks the proscribed purpose or intent.                                   
            Technalysis Corp. v. Commissioner, supra at 403; Pelton Steel                              
            Casting Co. v. Commissioner, 28 T.C. 153, 173 (1957), affd. 251                            
            F.2d 278 (7th Cir. 1958).  However, it has been recognized that                            
            without the presumption provided in section 533(a), the                                    
            accumulated earnings tax would largely, as a practical matter, be                          
            unenforceable.  Ivan Allen Co. v. United States, supra at 628.                             
                  Section 1.533-1(a)(2), Income Tax Regs., sets forth factors                          
            to be considered in determining whether a corporation had the                              
            proscribed purpose.  Some of the relevant factors are:  (1)                                
            Dealings between the corporation and its shareholders for the                              
            personal benefit of the shareholders; for example, personal                                
            loans; (2) corporate investment of undistributed assets in                                 
            unrelated businesses or investments; and (3) the corporation's                             
            dividend history.                                                                          
                  Section 535(a) defines "accumulated taxable income" (the                             
            recomputed taxable income of the corporation against which tax                             
            under section 531 is imposed) as the taxable income of the                                 
            corporation, as adjusted in section 535(b), less the dividend-                             




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