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needs do not exceed such taxable income, petitioner nonetheless
will be able to reduce its accumulated taxable income by the
amount of any reasonable accumulations. Sec. 535(a), (c).
If, pursuant to section 534(c), a taxpayer submits a
statement of the grounds (together with facts sufficient to show
the basis thereof) on which the taxpayer relies to establish that
all or any part of its earnings and profits have not been
permitted to accumulate beyond the reasonable needs of its
business (section 534(c) statement or statement), respondent
bears the burden of proving the grounds set forth in the
statement. Sec. 534(a)(2). Respondent, however, bears the
burden of proof in such a case
only with respect to the relevant ground or grounds set
forth in the statement submitted by the taxpayer, and
only if such ground or grounds are supported by facts
(contained in the statement) sufficient to show the
basis therof [sic]. [Sec. 1.534-2(a)(2), Income Tax
Regs.]
The burden of proof remains on the taxpayer, inter alia, if the
taxpayer submits a statement "but the ground or grounds on which
the taxpayer relies are not relevant to the allegation or, if
relevant, the statement does not contain facts sufficient to show
the basis thereof." Sec. 1.534-2(b)(2), Income Tax Regs.
Accordingly, the only issue we decide is the sufficiency of
the statement submitted by petitioner.2 In Bittker & Eustice,
2 Petitioner contends that respondent bears the burden of
proof as to the accumulated earnings issue in its entirety. In
(continued...)
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