"Thomas Healy" wrote:

- quote -

The statute by Congressional intent was not aimed at
publicly-held corporations. I believe the Tax Court has
ruled only that the tax can be applied to a nonpublic corp,
but one which is not closely-held (a reasonable argument by
the petitioner in that case, under language in sec 532) .
The gov't has always had the burden of proof on this issue,
and it would seem completely unwinnable by IRS on a Fortune
500 company.

Fred F.

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"Maggie Wong" <szewanwongs[at]sbcglobal.net> wrote:

- quote -

Investments have nothing to do with AET. Serious (i.e.,
well-planned-for) needs would be things like expansion of
the business, buying another company and merging operations
and similar "major" items. If you are faced with an IRS
audit where AET has been raised as an issue, you don't want
to handle this without good tax counsel. AEP doesn't arise
other than in that context, though if you have more than
$250,000 of "idle" investments in a C corporation it is
prudent to develop a plan to avoid the AEP in the future.

I had wondered for some years how Microsoft could build up
such a huge cash hoard without triggering the AET. Thus, it
didn't surprise me when they paid such a huge dividend a
couple of years ago.

--
Tom Healy, CPA
Boulder, CO
Web: http://www.tomhealycpa.com

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

What are justifiable needs of business under section 531?
What kind of investments are not subject to accumulated
earnings tax?

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >