Advanced Delivery and Chemical Systems Nevada, Inc. - Page 18

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               In Dahlem Found., Inc. v. Commissioner, supra, we concluded            
          that a corporation’s activities (e.g., locating land for a                  
          shopping center, negotiating and paying the purchase price for              
          the land, securing leases for occupancy of buildings in the new             
          shopping center, and performing management functions with respect           
          to the shopping center) established that the corporation did not            
          constitute a mere holding company for purposes of the accumulated           
          earnings tax.  Id. at 1576-1577.  We explained that the word                
          “mere” in the statutory language at issue is meant to draw a                
          distinction between corporations that are strictly passive in               
          nature and those which engage in some measure of business                   
          activity.  Id. at 1576; see also sec. 1.533-1(c), Income Tax                
          Regs. (defining a holding company as a corporation that has                 
          practically no activities except holding property and collecting            
          income therefrom).                                                          
               Under section 1.537-3(b), Income Tax Regs., it is provided             
          that, for purposes of the accumulated earnings tax, where a                 
          corporation substantially owns and effectively operates a                   
          subsidiary company, the business activities of the subsidiary may           

          burden of proof as to whether a corporation constitutes a mere              
          holding company for purposes of the accumulated earnings tax may            
          be available under the provisions of sec. 7491.  The parties                
          herein, however, do not request any such shift in the burden of             
          proof as to the issue of petitioner’s status as a mere holding              

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