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Accumulated Earnings Tax
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More than 10.000 documents for Accumulated Earnings Tax
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... that a corporation that has accumulated earnings "beyond the reasonable needs of the busin...
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Q: Should I convert my regular IRA to a Roth IRA? A: The tax- free withdrawals of accumulated earnings from a Roth IRA are appealing. The tax laws allow taxpayers with adjusted gross incomes of less than $100,000 to transfer money in a regular IRA to a Roth IRA without having to pay any early-withdrawal penalties. The catch is that you must pay income tax on the amount transferred. Whether you'll come out ahead in the long run by doing this conversion depends largely on your time horizon and retirement tax bracket. The younger you are and the higher the tax bracket you think that you'll be in when you retire, the more the conversion makes sense.
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The accumulated earnings tax (AET) penalizes undistributed profits under IRC 533 but can be avoided if the need for income accumulation can be documented. A formula for determining what income is necessary is included in the Tax Court decision in the case of Bardahl Manufacturing Corp. The burden of proof in AET assessment lies on the taxpayer unless the case is to be heard before the Tax Court, when the burden shifts to the IRS. Proper documentation of the reasons behind the accumulation of earnings may prevent the IRS from pursuing beyond initial requests for information.
