- 30 -                                         
          with respect to petitioner’s retained earnings constituted the              
          reason such earnings were retained and not distributed.                     
               On the credible evidence before us, even if petitioner were            
          regarded as a mere holding company for purposes of the                      
          accumulated earnings tax, and even if petitioner were regarded as           
          having accumulated earnings beyond the reasonable needs of its              
          business, the evidence establishes that petitioner did not                  
          accumulate its earnings during its 1996 and 1997 short taxable              
          years before us for the purpose of avoiding the Federal income              
          tax with respect to its shareholders.                                       
               We conclude that for the short taxable years in issue                  
          petitioner did not permit its earnings and profits to accumulate            
          for the purpose of avoiding the Federal income tax with respect             
          to its shareholders.  Petitioner is not subject to the                      
          accumulated earnings tax for the years in issue.                            
                                             Decision will be entered                 
                                        for petitioner.                               
Page:  Previous   11   12   13   14   15   16   17   18   19   20   21   22   23   24   25   26   27   28   29   30   Last modified: May 25, 2011