11-04-2012, 03:38 PM
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It's 42
Industry Role:
Join Date: Jun 2010
Location: Global
Posts: 18,083
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Quote:
4.10.13.2 (03-30-2005)
Accumulated Earnings Tax (IRC Section 531)
The purpose of the accumulated earnings tax is to prevent a corporation from accumulating its earnings and profits beyond the reasonable needs of the business for the purpose of avoiding income taxes on its stockholders.
Liability for the accumulated earnings tax is based on two conditions:
The corporation must have retained more earnings and profits than it can justify for the reasonable needs of the business.
There must be an intent on the part of the corporation to avoid the income tax on its stockholders by accumulating earnings and profits instead of distributing them;
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You can't differ the spending forever. So, you make the distribution and pay taxes on it then spend -- that spending is "stimulus" consumer consumption -- (2005) hmmm ...
Point being, eventually money earned is spent ( or saved and loaned out (banks, equities, real estate)). |
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