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8.7.1.3
(11-06-2007)
Accumulated Earnings Tax IRC Notification
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Appeals Officers or Tax Computation Specialists: Whoever prepares the settlement computations, is responsible for providing the following information when accumulated earnings
tax is present in the case.
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Because accumulated earnings tax is embedded in the body of the settlement computation and is hard to see, prepare supporting
schedules to help explain the computation.
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The Tax Computation Specialist responsibility for entries on the Form 5403 Instructions to APS spreadsheet is listed below:
Accumulated earnings tax is provided in Reference Number 320 field on the Form 5403 Worksheet. This requirement is valid for
MFT 02 returns due prior to 1/1/86.
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Appeals Processing Services: Except for the items listed below, follow the instructions for completing Form 5403, Appeals Closing Record, when closing
a case with Accumulated Earnings Tax (AET). See Exhibit 8.20.7-1.:
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Item 12 - The amount entered will be the total of income tax deficiency PLUS the AET.
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Item 15 - If taxable period is 198509 or prior, enter the amount of AET with Ref. Number 320.
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Item 800/801 - Include the Item 12 amount but DO NOT include Ref. Number 320 amount because it would duplicate the AET amount
already reflected in Item 12.
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Item A - Special Handling Instructions - Check the " Other" box and enter "AET of $ _included in Item 12."
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Termination of Form 872-A by the taxpayer is rare. For special rules concerning the termination of a Special Consent on an
accumulated earnings tax case or a personal holding company tax case, see IRM 25.6.22.7.
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See IRM 4.10.13, Examination of Returns, Certain Technical Issues, for additional information and procedural instructions
for accumulated earnings tax cases.
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