Reasonable needs for purposes of the accumulated earnings tax include loans to suppliers and customers.

Question

Quizplus · Accepted Answer

Reasonable needs for purposes of the accumulated earnings tax can include loans to suppliers and customers, as well as investments in the expansion of the business or the development of new products. The key is that the accumulation of earnings must be for a legitimate business purpose and not for the purpose of avoiding taxes.

Reasonable Needs for Purposes of the Accumulated Earnings Tax Include