
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC532]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
   Subchapter G--Corporations Used to Avoid Income Tax on Shareholders
 
          PART I--CORPORATIONS IMPROPERLY ACCUMULATING SURPLUS
 
Sec. 532. Corporations subject to accumulated earnings tax


(a) General rule

    The accumulated earnings tax imposed by section 531 shall apply to 
every corporation (other than those described in subsection (b)) formed 
or availed of for the purpose of avoiding the income tax with respect to 
its shareholders or the shareholders of any other corporation, by 
permitting earnings and profits to accumulate instead of being divided 
or distributed.

(b) Exceptions

    The accumulated earnings tax imposed by section 531 shall not apply 
to--
        (1) a personal holding company (as defined in section 542),
        (2) a foreign personal holding company (as defined in section 
    552),
        (3) a corporation exempt from tax under subchapter F (section 
    501 and following), or
        (4) a passive foreign investment company (as defined in section 
    1297).

(c) Application determined without regard to number of shareholders

    The application of this part to a corporation shall be determined 
without regard to the number of shareholders of such corporation.

(Aug. 16, 1954, ch. 736, 68A Stat. 179; Pub. L. 98-369, div. A, title I, 
Sec. 58(a), July 18, 1984, 98 Stat. 574; Pub. L. 99-514, title XII, 
Sec. 1235(f)(1), Oct. 22, 1986, 100 Stat. 2575; Pub. L. 105-34, title 
XI, Sec. 1122(d)(1), Aug. 5, 1997, 111 Stat. 977.)


                               Amendments

    1997--Subsec. (b)(4). Pub. L. 105-34 substituted ``section 1297'' 
for ``section 1296''.
    1986--Subsec. (b)(4). Pub. L. 99-514 added par. (4).
    1984--Subsec. (c). Pub. L. 98-369 added subsec. (c).


                    Effective Date of 1997 Amendment

    Section 1124 of Pub. L. 105-34 provided that: ``The amendments made 
by this subtitle [subtitle C (Secs. 1121-1124) of title XI of Pub. L. 
105-34, enacting section 1296 of this title, amending this section and 
sections 542, 551, 852, 1291, 1293, 1296 to 1298, and 4982 of this 
title, redesignating subpart C of part VI of subchapter P of this 
chapter as subpart D of part VI of subchapter P of this chapter, and 
renumbering sections 1296 and 1297 of this title as sections 1297 and 
1298, respectively, of this title] shall apply to--
        ``(1) taxable years of United States persons beginning after 
    December 31, 1997, and
        ``(2) taxable years of foreign corporations ending with or 
    within such taxable years of United States persons.''


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 applicable to taxable years of foreign 
corporations beginning after Dec. 31, 1986, see section 1235(h) of Pub. 
L. 99-514, set out as an Effective Date note under section 1291 of this 
title.


                    Effective Date of 1984 Amendment

    Section 58(c) of Pub. L. 98-369 provided that: ``The amendments made 
by this section [amending this section and section 535 of this title] 
shall apply to taxable years beginning after the date of the enactment 
of this Act [July 18, 1984].''

                  Section Referred to in Other Sections

    This section is referred to in sections 531, 533 of this title.
