accumulated earnings tax
- It's a tax imposed on a company's earnings that are accumulated and kept within the company, instead of being distributed to stockholders, but aren't needed for the legitimate operations of the business
- The corporation was careful to avoid accumulating excess profits to elude the accumulated earnings tax.
- Understanding the concept of accumulated earnings tax can help businesses make smart decisions on profit distribution.
- The accountant worked to ensure the company maintained just enough profits to meet its operational needs and avoid the accumulated earnings tax.