Reasonable Needs of Business

Reasonable Needs of Business may have one of the following meanings, depending the context of the term:

1. reasonably anticipated needs of a business.

2. certain redemption needs with respect to a deceased shareholder or a private foundation.

This concept applies to determination of the accumulated earnings credit, which is the greater of $250,000 ($150,000 for certain personal service companies) or the accumulated earnings and profits retained for the reasonable needs of the business. Former IRC (check if this IRC provision is current here) § 537(a).