-33-
of obligation that petitioner survive in a highly competitive
business. Avoidance of tax at the shareholder level played no
part in the financial management of petitioner by E.S. Gustafson
and Sherwood Gustafson.
Respondent contends that petitioner was formed or availed of
to avoid shareholder level taxation. Respondent argues that
petitioner's detailed plans are an attempt to avoid the
accumulated earnings tax. Respondent argues that the fact that
E.S. Gustafson and Sherwood Gustafson knew about the accumulated
earnings tax during the years in issue, that petitioner attached
Bardahl computations to its minute sheets, and that petitioner
used language in its CEP and minutes like that used in the
accumulated earnings tax statutes shows that petitioner acted
merely to avoid the accumulated earnings tax. We disagree.
Petitioner properly had and contemporaneously recorded its
specific and definite plans.
Respondent argues that we should disregard petitioner's
grounds for accumulating funds that were not listed in the CEP12
and argues that petitioner's failure to include certain grounds
in the CEP shows that those grounds were not bona fide. We
disagree. Petitioner reasonably recognized the potential harm to
its business if it lost the Winn-Dixie account; the fact that it
12 Petitioner did not list the following grounds for
accumulation in its CEP: (a) Dependence on Winn-
Dixie/competition, (b) herd relocation and land development, (c)
stock redemption, and (d) debt retirement.
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