-31-
173. Whether a corporation was formed or availed of to avoid tax
or has permitted its earnings and profits to accumulate beyond
its reasonable needs are questions of fact. United States v.
Donruss Co., supra at 307; Helvering v. National Grocery Co., 304
U.S. 282 (1938); Bremerton Sun Publ'g Co. v. Commissioner, 44
T.C. 566, 582 (1965).
2. Burden of Proof
Before respondent issued the notice of deficiency in this
case, respondent notified petitioner that respondent proposed to
issue a notice of deficiency for fiscal years 1987, 1988, and
1989 including a determination that petitioner is liable for
accumulated earnings tax under section 531. Petitioner submitted
a timely statement under section 534(c) stating the grounds on
which it relied to establish that it had not accumulated earnings
beyond the reasonable needs of its business. In this statement,
petitioner alleged that it had the following grounds for
accumulating earnings: (a) Working capital needs, (b) self-
insurance (general and product liability), (c) replacement of its
herd, (d) replenish/increase herd and animal waste control
system, (e) capital improvements, (f) dependence on Winn-Dixie
and fears of competition, and (g) herd relocation and land
development. In its petition, petitioner asserted that it had
two additional grounds for accumulation: stock redemption and
retirement of debt.
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