Advanced Delivery and Chemical Systems Nevada, Inc. - Page 22

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          required or legally obligated to do, it is also relevant what               
          management of a corporation reasonably believes constitutes the             
          reasonable needs of the business.  See, e.g., Ivan Allen Co. v.             
          United States, 422 U.S. 617, 624-628 (1975).                                
               We also note that in Turner v. Commissioner, supra, the                
          activities of a partnership in which the taxpayer held a general            
          partnership interest were taken into account in concluding that             
          the taxpayer did not constitute a mere holding company.  We                 
          believe that this aspect of the holding in Turner supports our              
          holding herein that activities of an affiliated partnership may             
          support the accumulation of earnings by a corporation that owns a           
          controlling interest in the partnership.  We note that, through             
          Holdings LLC and Operating LLC, petitioner owned 99 percent of              
          the limited and 99 percent of the general partnership interests             
          in ADCS-Limited.                                                            
               Under the particular facts and circumstances of this case,             
          in evaluating the earnings retained by petitioner as of the end             
          of its short 3-month taxable year ending December 31, 1996, and             
          as of the end of its short 9-month taxable year ending October              
          10, 1997, we believe it appropriate to take into account the                
          business activities of ADCS-Limited and of ADCS-Korea.  The facts           
          before us establish that petitioner and its affiliated                      
          corporations, limited liability companies, and partnership                  

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