§537 Reasonable needs of the business

Summary

Defines what counts as the "reasonable needs of the business" for these tax rules. It covers three things: the business’s reasonably expected needs; the amount needed (or expected to be needed) to buy back stock included in a deceased shareholder’s estate in the year of death or later, up to the limit in section 303(a); and the amount needed (or expected to be needed) to redeem stock from a private foundation that the foundation held on May 26, 1969 (or received by will or an irrevocable trust under section 4943(c)(5)) when that stock was or would have been excess business holdings on that date. Paying an obligation to make one of those redemptions counts the same as doing the redemption. Setting aside reasonable amounts for expected product liability losses (as defined in section 172(f) before the Tax Cuts and Jobs Act), under rules set by the Secretary, counts as saving for the business’s expected needs. For tax years before the first year mentioned above, apply these rules without regard to later redemptions.