Thompson Engineering Co., Inc. v. Commissioner of Internal Revenue

Taxpayer, Thompson Engineering Co., Inc. (Thompson Engineering), appealed from a judgment of the tax court concluding that taxpayer permitted its earnings and profits to accumulate beyond the reasonable needs of its business with a purpose to avoid income with respect to its shareholder and imposing liability upon the taxpayer for accumulated earnings pursuant to § 531 of the Internal Revenue Code of 1954 (IRC).

Taxpayer was incorporated in 1959 and, since that time, has been a construction subcontractor primarily engaged in general plumbing, heating, air conditioning, and related sheet metal…