26 USC 532: Corporations subject to accumulated earnings tax

26 USC 532: Corporations subject to accumulated earnings tax Text contains those laws in effect on January 4, 1995

From Title 26-INTERNAL REVENUE CODESubtitle A-Income TaxesCHAPTER 1-NORMAL TAXES AND SURTAXESSubchapter G-Corporations Used to Avoid Income Tax on ShareholdersPART I-CORPORATIONS IMPROPERLY ACCUMULATING SURPLUS

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§532. Corporations subject to accumulated earnings tax

(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 foreign personal holding company (as defined in section 552),

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

(4) a passive foreign investment company (as defined in section 1296).

(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.

(Aug. 16, 1954, ch. 736, 68A Stat. 179 ; July 18, 1984, Pub. L. 98–369, div. A, title I, §58(a), 98 Stat. 574 ; Oct. 22, 1986, Pub. L. 99–514, title XII, §1235(f)(1), 100 Stat. 2575 .)

Amendments

1986-Subsec. (b)(4). Pub. L. 99–514 added par. (4).

1984-Subsec. (c). Pub. L. 98–369 added subsec. (c).

Effective Date of 1986 Amendment

Amendment by Pub. L. 99–514 applicable to taxable years of foreign corporations beginning after Dec. 31, 1986, see section 1235(h) of Pub. L. 99–514, set out as an Effective Date note under section 1291 of this title.

Effective Date of 1984 Amendment

Section 58(c) of Pub. L. 98–369 provided that: "The amendments made by this section [amending this section and section 535 of this title] shall apply to taxable years beginning after the date of the enactment of this Act [July 18, 1984]."

Cross References

Construction reserve fund deposits under Merchant Marine Act of 1936 as not constituting accumulation of earnings or profits, see section 1161 of Title 46, Appendix, Shipping.

Section Referred to in Other Sections

This section is referred to in sections 531, 533 of this title.