CHAPTER 1— NORMAL TAXES AND SURTAXES›Subchapter G— Corporations Used to Avoid Income Tax on Shareholders›PART I— CORPORATIONS IMPROPERLY ACCUMULATING SURPLUS
§ 533. Evidence of purpose to avoid income tax
26 U.S.C. Subtitle A — Income Taxes (Internal Revenue Code) · 2026 edition · updated 2026-10-03 · United States
(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.)
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