- 51 - paid deduction (as defined in section 561) and the accumulated earnings credit (as defined in section 535(c)). Insofar as relevant to the instant cases, this accumulated earnings credit is the amount of the corporation's earnings and profits that are retained for the reasonable needs of the business. Where a taxpayer can show that all its current earnings were accumulated for the reasonable needs of the business, there is no accumulated earnings tax since the accumulated earnings credit eliminates the amount against which the tax is imposed. E.g., Magic Mart, Inc. v. Commissioner, 51 T.C. 775, 799 (1969); Faber Cement Block Co. v. Commissioner, 50 T.C. 317, 336 (1968); John P. Scripps Newspapers v. Commissioner, 44 T.C. 453, 474 (1965). Whether a taxpayer's accumulation of earnings and profits is in excess of its reasonable business needs is a factual question. Helvering v. National Grocery Co., 304 U.S. 282 (1938). The "reasonable needs of the business" includes the reasonably anticipated needs of the business. Sec. 537(a)(1); sec. 1.537- 1(a), Income Tax Regs. With respect to a corporation's reasonably anticipated future business needs, section 1.537-1(b), Income Tax Regs, provides: (b) Reasonably anticipated needs. (1) In order for a corporation to justify an accumulation of earnings and profits for reasonably anticipated future needs, there must be an indication that the future needs of the business require such accumulation, and the corporation must have specific, definite, and feasiblePage: Previous 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 Next
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