Accumulated Earnings and Profits Law and Legal Definition

Accumulated earnings and profits is an accounting term that is applied to stockholders of closely held businesses. Accumulated earnings and profits refer to a company’s net profits after deducting the stockholders distributions. This is same as retained earnings, since retained earnings also refer to the net profits of a company after shareholder distributions. Accumulated earnings and profits include reserve accounts that are not deductible and it shall be included to calculate taxable earnings.