"A corporation can accumulate its earnings for a possible expansion or other bona fide business reasons. However, if a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of 15%. If the accumulated earnings tax applies, interest applies to the tax from the date the corporate return was originally due, without extensions.
"To determine if the corporation is subject to this tax, first treat an accumulation of $250,000 or less generally as within the reasonable needs of most businesses.....
"In determining if the corporation has accumulated earnings and profits beyond its reasonable needs, value the listed and readily marketable securities owned by the corporation and purchased with its earnings and profits at net liquidation value, not at cost.
"Reasonable needs of the business include the following.
"Specific, definite, and feasible plans for use of the earnings accumulation in the business.....
"The absence of a bona fide business reason for a corporation's accumulated earnings may be indicated by many different circumstances, such as a lack of regular distributions to its shareholders....
Good thing for Apple that the tax laws of the USA don't seem to apply to megacorps.
The last quote there seems to indemnify them...they need cash to pay out "regular distributions to its shareholders" thus any amount of money they have is justified by the need for cash to pay dividends.
From http://www.irs.gov/publications/p542/ar02.html#en_US_2011_pu...
"A corporation can accumulate its earnings for a possible expansion or other bona fide business reasons. However, if a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of 15%. If the accumulated earnings tax applies, interest applies to the tax from the date the corporate return was originally due, without extensions.
"To determine if the corporation is subject to this tax, first treat an accumulation of $250,000 or less generally as within the reasonable needs of most businesses.....
"In determining if the corporation has accumulated earnings and profits beyond its reasonable needs, value the listed and readily marketable securities owned by the corporation and purchased with its earnings and profits at net liquidation value, not at cost.
"Reasonable needs of the business include the following.
"Specific, definite, and feasible plans for use of the earnings accumulation in the business.....
"The absence of a bona fide business reason for a corporation's accumulated earnings may be indicated by many different circumstances, such as a lack of regular distributions to its shareholders....
Good thing for Apple that the tax laws of the USA don't seem to apply to megacorps.