# 26 U.S.C. § 533: Evidence of purpose to avoid income tax

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s533>. Cite pinpoints as 26 U.S.C. § 533(a)(1).

## § 533(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.

## § 533(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.

## Regulations

- [Treas. Reg. § 1.533-1](/26/reg/1.533-1.md): Evidence of purpose to avoid income tax. (interprets § 533)
- [Treas. Reg. § 1.533-2](/26/reg/1.533-2.md): Statement required. (interprets § 533)

## Leading cases

- [Ivan Allen Co. v. United States, 422 U.S. 617 (1975)](https://www.courtlistener.com/opinion/109305/ivan-allen-co-v-united-states/)
- [Golconda Mining Corp. v. Commissioner, 58 T.C. 139 (1972)](https://www.courtlistener.com/opinion/4703315/golconda-mining-corp-v-commissioner/)
- [Snow Mfg. Co. v. Commissioner, 86 T.C. 260 (1986)](https://www.courtlistener.com/opinion/4706235/snow-mfg-co-v-commissioner/)

## Connections

Cites: § 532 Corporations subject to accumulated earnings tax

Cited by: none

Derived from: 1939 § 102(b), (c)

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 179