Advanced Delivery and Chemical Systems Nevada, Inc. - Page 21

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          corporate taxpayers, in appropriate circumstances, are allowed to           
          take into account business activities of and to accumulate                  
          earnings for the needs of business entities they control, even              
          though the taxpayer constitutes a separate legal entity.                    
          Petitioner also argues that through general partnership                     
          principles the business needs of a partnership may be attributed            
          to a corporate partner that controls the partnership.                       
               We agree generally with petitioner.  For accumulated                   
          earnings tax purposes, respondent’s own regulations allow                   
          corporations, depending on the facts and circumstances to treat             
          the business activities of affiliated entities as their own.  See           
          sec. 1.537-3(b), Income Tax Regs.                                           
               Respondent cites to Turner v. Commissioner, T.C. Memo. 1965-           
          101, wherein it was found that a corporate taxpayer, for purposes           
          of the accumulated earnings tax, had unreasonably accumulated               
          earnings and profits for the needs of a partnership in which the            
          corporation owned a limited partnership interest.  The basis for            
          the holding in this Memorandum Opinion appears to be that, as a             
          limited partner, the corporation had limited risk and liability             
          and therefore could not be called upon to pay any of the debts of           
          the partnership and therefore could not be forced to invest                 
          additional funds in the limited partnership.  In this regard, we            
          believe respondent reads too much into Turner.  For accumulated             
          earnings tax purposes, in addition to what a corporation is                 

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