U.S. Code » Title 26 » Subtitle Subtitle A— Income Taxes › Chapter CHAPTER 1— NORMAL TAXES AND SURTAXES › Subchapter Subchapter G— Corporations Used to Avoid Income Tax on Shareholders › Part PART I— CORPORATIONS IMPROPERLY ACCUMULATING SURPLUS

26 U.S.C. § 533

Evidence of purpose to avoid income tax

Read at: OLRCuscode.house.gov CornellLII GovInfogovinfo.gov JustiaTitle 26 CasesGoogle Scholar
(a) Unreasonable accumulation determinative of purpose

For purposes of section 532, the fact that the earnings and profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid the income tax with respect to shareholders, unless the corporation by the preponderance of the evidence shall prove to the contrary.

(b) Holding or investment company

The fact that any corporation is a mere holding or investment company shall be prima facie evidence of the purpose to avoid the income tax with respect to shareholders.

(Aug. 16, 1954, ch. 736, 68A Stat. 179.)
Notes of Decisions
Cited in 20 cases, 1958–2003 · leading case: Fulman v. United States, 434 U.S. 528 (1978).
Sort: Relevance Newest Treatment
Fulman v. United States, 434 U.S. 528 (1978). · cites it 2× “" 26 U. S. C. § 533 (a). Unrealized appreciation does not figure in the tax base to which the accumulated earnings tax applies.”
Haffner's Serv. Stations, Inc. v. Comm'r, 326 F.3d 1 (1st Cir. 2003). · cites it 2× “Section 531 of the Internal Revenue Code imposes an accumulated earnings tax on a corporation “availed of for the purpose of avoiding” the personal income tax on shareholders by accumulating rather than distributing earnings. Although this language is couched in terms of…”
Ivan Allen Co. v. United States, 422 U.S. 617 (1975). · cites it 2× “The question is one of statutory construction: In determining whether a corporation has accumulated earnings and profits in excess of reasonable business needs within the meaning of 26 U. S. C. § 533 (a), are assets purchased with earnings and profits to be valued at the amount…”
Presbyterian & Reformed Publ'g Co. v. Comm'r of Internal Revenue, 743 F.2d 148 (3d Cir. 1984). “A violation of this section is established by a corporation’s accumulation of earnings beyond the reasonable needs of the business, 26 U.S.C. § 533 , which may include reasonably anticipated future needs of the enterprise.”
Duke Labs., Inc. v. United States, 222 F. Supp. 400 (D. Conn. 1963). · cites it 2× “Code of 1954, § 533, 26 U.S.C. § 533 (1958). 11 . Int.Rev.Code of 1954, § 537, 26 U.”
The Shaw-Walker Co., a Corp. v. Comm'r of Internal Revenue, 390 F.2d 205 (6th Cir. 1968). · cites it 2× “26 U.S.C. § 533 (a). 3 If the taxpayer is able to prove that it accumulated all or any part of its earnings to meet its reasonable business needs, this amount is allowable as a credit against its accumulated earnings tax.”
Empire Land Corp. v. United States, 473 F. Supp. 1289 (E.D. La. 1979). · cites it 6× “26 U.S.C. § 533 . 3 26 C.F.R. § 1.533 -l(c) defines a holding or investment company as follows: “A corporation having practically no activities except holding property and collecting the income therefrom or investing therein shall be considered a holding company within the…”
The Cheyenne Newspapers, Inc. v. Comm'r of Internal Revenue, 494 F.2d 429 (10th Cir. 1974). “26 U.S.C. § 533 (a) provides : (a) Unreasonable accumulation determinative of purpose.”
Raymond I. Smith, Inc. v. Comm'r of Internal Revenue, 292 F.2d 470 (9th Cir. 1961). “As did section 102(e) of the 1939 Code, section 533(a) of the Internal Revenue *474 Code of 1954, 26 U.S.C.A. § 533 (a), provides that if the earnings and profits of a corporation are permitted to accumulate beyond the reasonable needs of the business, that fact shall be…”
Young Motor Co., Inc. v. Comm'r of Internal Revenue, 281 F.2d 488 (1st Cir. 1960). “The re-enactment of this section tends to minimize the emphasis on reasonable business needs -which is reflected in the legislative history leading to the enactment of section 534(a) which, in certain instances, places the burden of proving lack of business need upon the…”
Apollo Indus., Inc., Etc. v. Comm'r of Internal Revenue, 358 F.2d 867 (1st Cir. 1966). “26 U.S.C. § 533 . “§ 533. Evidence of purpose to avoid income tax.”
Est. of Henry G. Egan, Transferee, Nw. Nat'l Bank v. Comm'r of Internal Revenue, 260 F.2d 779 (8th Cir. 1958). “Section 533(a) of the 1954 Code, 26 U.S.C.A. § 533 (a), which, in effect, is the same as section 102(c) of the Internal Revenue Code of 1939, 26 U.”
Show all 20 citing cases →
26 U.S.C. § 533(a): 1 case
Cummins Diesel Sales of Oregon, Inc. v. United States, 207 F. Supp. 746 (D. Or. 1962).
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.