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26 U.S.C. § 532 — Corporations subject to accumulated earnings tax

submitted 72 years ago by ch. 736 to r/title-26-INTERNAL-REVENUE-CODE · 139 words · no verdicts yet

in plain englishAI-generated · not legal advice

The accumulated earnings tax applies to corporations that accumulate earnings to avoid shareholder income tax, with three listed exceptions. The rule is applied without regard to how many shareholders the corporation has.

(a) General rule. The section 531 accumulated earnings tax applies to every corporation other than those in subsection (b) that was formed or used to avoid income tax on its shareholders, or another corporation’s shareholders, by accumulating earnings and profits instead of dividing or distributing them. (b) Exceptions. The tax does not apply to (1) a personal holding company as section 542 defines it; (2) a corporation exempt under subchapter F, section 501 and following; or (3) a passive foreign investment company as section 1297 defines it. (c) Number of shareholders. Whether this part applies to a corporation is decided without regard to the number of its shareholders.
the actual law source: uscode.house.gov ↗public domain
(a) General rule

The accumulated earnings tax imposed by section 531 shall apply to every corporation (other than those described in subsection (b)) formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.

(b) Exceptions

The accumulated earnings tax imposed by section 531 shall not apply to—

(1)

a personal holding company (as defined in section 542),

(2)

a corporation exempt from tax under subchapter F (section 501 and following), or

(3)

a passive foreign investment company (as defined in section 1297).

(c) Application determined without regard to number of shareholders

The application of this part to a corporation shall be determined without regard to the number of shareholders of such corporation.

Source credit: (Aug. 16, 1954, ch. 736, 68A Stat. 179; Pub. L. 98–369, div. A, title I, § 58(a), July 18, 1984, 98 Stat. 574; Pub. L. 99–514, title XII, § 1235(f)(1), Oct. 22, 1986, 100 Stat. 2575; Pub. L. 105–34, title XI, § 1122(d)(1), Aug. 5, 1997, 111 Stat. 977; Pub. L. 109–135, title IV, § 403(n)(1), Dec. 21, 2005, 119 Stat. 2626.)

history & why it existsrecord from the source credit
  • 1954Enacted · Act of Aug. 16, 1954, ch. 736
  • 1984Amended · Pub. L. 98-369 · 98 Stat. 574
  • 1986Amended · Pub. L. 99-514 · 100 Stat. 2575
  • 1997Amended · Pub. L. 105-34 · 111 Stat. 977
  • 2005Amended · Pub. L. 109-135 · 119 Stat. 2626

A history note hasn’t been published yet. The record shows enactment by ch. 736 on 1954-08-16.

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