- 52 - plans for the use of such accumulation. Such an accumulation need not be used immediately, nor must the plans for its use be consummated within a short period after the close of the taxable year, provided that such accumulation will be used within a reasonable time depending upon all the facts and circumstances relating to the future needs of the business. Where the future needs of the business are uncertain or vague, where the plans for the future use of an accumulation are not specific, definite, and feasible, or where the execution of such a plan is postponed indefinitely, an accumulation cannot be justified on the grounds of reasonably anticipated needs of the business. (2) Consideration shall be given to reasonably anticipated needs as they exist on the basis of the facts at the close of the taxable year. Thus, subsequent events shall not be used for the purpose of showing that the retention of earnings or profits was unreasonable at the close of the taxable year if all the elements of reasonable anticipation are present at the close of such taxable year. However, subsequent events may be considered to determine whether the taxpayer actually intended to consummate or has actually consummated the plans for which the earnings and profits were accumulated. * * * Upon determining the amount necessary to satisfy the "reasonable needs of the business", we shall not simply compare this amount with the corporation's total accumulated earnings and profits, but shall examine the amount of accumulated earnings and profits that is reflected in business-related assets or in idle net liquid assets of the corporation. Ivan Allen Co. v. United States, supra at 628; Smoot Sand & Gravel Corp. v. Commissioner, 274 F.2d 495, 501 (4th Cir. 1960), affg. T.C. Memo. 1958-221. In other words, we must consider whether the corporation's accumulated earnings and profits have been translated into assets related to the business, so as to have been employed to meet thePage: Previous 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 Next
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