Forbidden Purpose

Forbidden Purpose means:
the use of an otherwise legal entity or method for the purpose of income tax avoidance. For example, the accumulated earnings tax is designed to prevent the forming or availing of a corporation for the purpose of enabling its shareholders to avoid the income tax by permitting earnings and profits to accumulate instead of being distributed. Former IRC (check if this IRC provision is current here) §532(a).

See the entries Income Tax and State Income Tax in the American Encyclopedia of Law.