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reasonable needs of its business. See secs. 531-537;2 Metro
Leasing & Dev. Corp. v. Commissioner, T.C. Memo. 2001-119. We
also decided the amount of reasonable compensation for
petitioner’s officers. To reflect our holding and to adjust for
agreed items, the parties were required to compute the amount of
resulting income tax and accumulated earnings tax liabilities
pursuant to Rule 155 computation procedures.
The parties, in docket No. 8054-99, disagree about the
computation of the accumulated earnings tax liability. That tax
liability is computed by applying the accumulated earnings tax
rate to a corporation’s accumulated taxable income. Accumulated
taxable income is computed by making certain adjustments to
taxable income. Respondent computed a proposed accumulated
earnings tax liability of $56,248, and petitioner disagreed,
contending that three additional adjustments should be made to
respondent’s computation. If any of petitioner’s proposed
adjustments are sustained, the resulting accumulated earnings tax
liability would be within a range of amounts from zero to
$51,074.
Petitioner argues that, in computing accumulated taxable
income, respondent failed to reduce taxable income by the
2 All section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
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