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We do not find petitioner’s activities to approach those
that this Court found sufficient to distinguish between a
corporation that is primarily a “holding company” and one that is
a “mere holding company” in Dahlem Found., Inc. v. Commissioner,
supra. Accordingly, we hold that petitioner is a “mere holding
company” within the meaning of section 533(b) and prima facie had
a purpose of avoiding the income tax on shareholders. In
addition, petitioner has not shown evidence of any purpose for
its accumulation other than testimony about possible expansion
and legal theories about possible needs.8 Accordingly,
8 We note that the burden of proof is on petitioner and has
not been shifted to respondent under sec. 534(c). See also Rule
142(e). Although it is unnecessary for us to consider whether
petitioner had reasonable needs of its business in excess of
$250,000, we must note that under traditional standards
petitioner has not shown that its needs exceeded the $250,000
amount. Petitioner’s needs were based on the speculation that
Mr. Valente’s future inability to provide such consultation to
the auto dealerships could result in defaults on obligations to
petitioner and that there would be a need for capital. The
financial status of the automobile dealerships, however, is not
available in this record, nor is there any indication that such
event was a need, without even considering whether it was
“reasonable”. Petitioner also anticipated the death of the
Valentes and the possibility of stock redemption to pay estate
taxes. To this respondent aptly points out that there would
likely be no estate tax burden when the first of the Valentes
died. Finally, although no formal plans had been made or action
taken, Mr. Valente described a desire to develop a parcel of
property which had been held by petitioner for an extended amount
of time. Although Mr. Valente testified about some of these
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