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INTERNAL REVENUE CODE OF 1954
accumulated earnings credit is the amount (if any) by which $60,000 exceeds the accumulated earnings and profits of the corporation at the close of the preceding taxable year. (4) ACCUMULATED
EARNINGS AND PROFITS.—For purposes
of
paragraphs (2) and (3), the accumulated earnings and profits a t the close of the preceding taxable year shall be reduced by the dividends which under section 563(a) (relating to dividends paid after the close of the taxable year) are considered as paid during such taxable year. (5) CROSS REFERENCE.— For denial of credit provided in paragraph (2) or (3) where multiple corporations are formed to avoid tax, see section 1551. SEC. 536. INCOME NOT PLACED ON ANNUAL BASIS.
Section 443(b) (relating to computation of tax on change of annual accounting period) shall not apply in the computation of the accumulated earnings tax imposed by section 531. SEC. 537. REASONABLE NEEDS OF THE BUSINESS. For purposes of this part, the term "reasonable needs of the business" includes the reasonably anticipated needs of the business. PART II—PERSONAL HOLDING COMPANIES Sec. Sec. Sec. Sec. Sec. Sec. Sec.
541. 542. 543. 544. 545. 546. 547.
Imposition of personal holding company tax. Definition of personal holding company. Personal holding company income. Rules for determining stock ownership. Undistributed personal holding company income. Income not placed on annual basis. Deduction for deficiency dividends.
SEC. 541. IMPOSITION OF PERSONAL HOLDING COMPANY TAX.
In addition to other taxes imposed by this chapter, there is hereby imposed for each taxable year on the undistributed personal holding company income (as defined in section 545) of every personal holding company (as defined in section 542) a personal holding company tax equal to the sum of— (1) 75 percent of the undistributed personal holding company income not in excess of $2,000, plus (2) 85 percent of the undistributed personal holding company income in excess of $2,000. SEC. 542. DEFINITION OF PERSONAL HOLDING COMPANY. (a) GENERAL RULE. — For purposes of this subtitle, the
term "personal holding company" means any corporation (other than a corporation described in subsection (c)) if— (1) GROSS INCOME REQUIREMENT.—At least 80 percent of its gross income for the taxable year is personal holding company income as defined in section 543, and (2) STOCK OWNERSHIP REQUIREMENT.—At any time during the last half of the taxable year more than 50 percent in value of its outstanding stock is owned, directly or indirectly, by or for not more than 5 individuals. For purposes of this paragraph, an organization described in section 503(b) or a portion of a trust 1535(c)(3)
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