Accumulated Earnings Tax financial definition of Accumulated Earnings Tax. Accumulated Earnings Tax finance term by the Free Online Dictionary.

Accumulated Earnings Tax

In the United States, a tax on a corporation for retained earnings the IRS deems to be excessive. Retained earnings are profits that are not paid out in dividends. Companies with a low payout ratio generally experience higher price appreciation on their stock, which would subject shareholders to a higher capital gains tax when they sell, rather than a higher tax on dividends. However, the tax rate on capital gains is lower than the tax on dividends. Thus, the accumulated earnings tax exists to ensure that the government is able to receive roughly the same amount in revenue regardless of how much or how little the corporation distributes in dividends.

accumulated earnings tax

A federal tax on a company's retained earnings that are considered in excess of what is reasonable. The purpose of an accumulated earnings tax is to make it more difficult to defer or lower the tax rate (that is, change from ordinary income to capital gains) on income that would ordinarily be paid to stockholders in dividends. For example, stockholders in high tax brackets generally prefer earnings be retained rather than paid in dividends so that they can avoid being taxed at ordinary rates. The position of the Internal Revenue Service is that if the funds are not actually needed by the firm and are only being retained for tax reasons, the accumulated earnings should be taxed.

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Retained Earnings	Moreover, there appears to be little possibility that the accumulated earnings tax would apply to the retained earnings of the U. Reforming the branch profits tax to advance neutrality by Brown, Fred B. / Virginia Tax Review 179 limits, AMT statutory exemption, accumulated earnings tax (AET) statutory credit/deduction, etc. The AJCA's domestic business provisions: the American Jobs Creation ... by Orbach, Kenneth N. / The Tax Adviser To encourage corporations to pay dividends rather than accumulating earnings and allowing shareholders to avoid income taxes, the accumulated earnings tax imposes a penalty tax on earnings accumulated beyond the reasonable needs of a business under IRC section 531. Accumulated earnings tax: deductibility of paid but contested ... by Hiner, Ronald R. / Journal of Accountancy	Accrual Method of Accounting Accrual of Obligation Accrual Rate Accruals accrue Accrued Assets Accrued Benefit Cost Method Accrued Benefits accrued but unpaid accrued depreciation Accrued Discount Accrued Dividend Accrued Expense Accrued Income Accrued Income Scheme accrued interest Accrued Market Discount Accrued Taxes Acculturation Accumulate Accumulated Amount Accumulated Benefit Obligation Accumulated Depletion accumulated depreciation accumulated dividend Accumulated Earnings Tax Accumulated Other Comprehensive Income Accumulated Profits Tax Accumulation Accumulation Area Accumulation Benefits Accumulation Period Accumulation Plan Accumulation Trust Accumulation Unit Accumulation Unit Value Accumulation/Distribution Line Accuracy Acelerador financiero Aceptacion bancaria Aceptacion condicional ACES Acetate Acetate Proof ACH Acheter Acheteur Achicar el margen Acid Rain Acid Test Ratio Acid-Test Ratio	Accumulated Amortization Accumulated Amount Accumulated Amounts Accumulated Benefit Obligation Accumulated Benefit Obligation Accumulated Benefit Obligation Accumulated Benefit Obligations Accumulated Call Meter Accumulated Campaign Service Medal Accumulated Cell Time Accumulated Day Off Accumulated Deferred Federal Income Taxes Accumulated Deferred Investment Tax Credits Accumulated Degree Days Accumulated Delta Range Accumulated Depletion Accumulated Deployed Time Accumulated Depreciation Accumulated Depreciation Accumulated Depreciation Accumulated Depreciation Accumulated Depreciation Accumulated Depreciation accumulated discrepancy accumulated divergence Accumulated dividend Accumulated Dividends accumulated dose accumulated dose equivalent Accumulated Earnings and Profits Accumulated Earnings Tax Accumulated Earnings Taxes Accumulated Earnings Taxes Accumulated Freezing Degree Day Accumulated Funds Used During Construction Accumulated Generating Operation Accumulated Hazard Rate Accumulated Income Accumulated Income Payment Accumulated Investment Value Accumulated Mission Elapsed Time Accumulated Operating Results Accumulated or Sampled on board Accumulated other comprehensive income Accumulated other comprehensive income Accumulated Other Comprehensive Loss Accumulated Ozone exposure over a threshold of 100 Parts Per Billion Accumulated Ozone Exposure over a threshold of 40 Parts Per Billion Accumulated Path Metric Accumulated Pension Benefit Obligation Accumulated Postretirement Benefit Obligation Accumulated Postretirement Benefit Obligation Accumulated Postretirement Benefit Obligations Accumulated Profit Accumulated Profits Accumulated profits tax Accumulated profits tax Accumulated Profits Taxes Accumulated Provision for Depreciation

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Retained Earnings

Moreover, there appears to be little possibility that the accumulated earnings tax would apply to the retained earnings of the U.

Reforming the branch profits tax to advance neutrality by Brown, Fred B. / Virginia Tax Review

179 limits, AMT statutory exemption, accumulated earnings tax (AET) statutory credit/deduction, etc.

The AJCA's domestic business provisions: the American Jobs Creation ... by Orbach, Kenneth N. / The Tax Adviser

To encourage corporations to pay dividends rather than accumulating earnings and allowing shareholders to avoid income taxes, the accumulated earnings tax imposes a penalty tax on earnings accumulated beyond the reasonable needs of a business under IRC section 531.

Accumulated earnings tax: deductibility of paid but contested ... by Hiner, Ronald R. / Journal of Accountancy

Accrual Method of Accounting

Accrual of Obligation

Accrued Benefit Cost Method