Current through Pub. L. 119-100Open in workspace

§ 533 Evidence of purpose to avoid income tax

(a) Unreasonable accumulation determinative of purpose

For purposes of section , 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.)

Operative text only. Editorial notes, amendment history, and effective dates: official OLRC text of § 533

Source: decipher.legal/usc/26/533 · Internal Revenue Code, current through Pub. L. 119-100 (OLRC XML of 2026-04-17)