The IRS is empowered to review the reasons for a distribution of profits in disproportion to the equity interest. If there is no justification, the IRS may apply to the company a sole tax of 40% on the excess distribution.

In the event that the disproportionate distribution is imputed to profits generated before January 1st, 2017 that paid the Substitute Tax , the sole tax on the excess of the distribution is 25%.