Your client, Blue Corporation, is a traditional C Corporation. The corporation has 1 shareholder, Cindy Lou Blue. Cindy Lue comes to your office to discuss the corporation. She is trying to minimize her personal tax liability for the year by not paying herself dividends or salary from the corporation. She asks you if there are any concerns that she should have with this strategy. Your job is to inform Cindy Lue Blue about the Accumulated Earnings & Profits tax (what she should be concerned about). 

Required:

Draft a client letter to Cindy Lou Blue explaining to her that she cannot leave profits in the corporation indefinitely tax free, due to the accumulated earnings and profits tax. Then, draft a research memo as you would prepare for your supervisor on this issue.