McHale is a C corporation owned by eight individuals, three of whom own 51% of the stock and comprise the board of directors. The corporation operates a successful automobile repair parts manufacturing business. It has accumulated $2 million of E&P and expects to accumulate another $300,000 annually. Annual dividends are $30,000. Because Americans retain their vehicles longer than they did 20 years ago, demand for McHale’s repair parts has been strong for the past five years. However, little expansion or replacement of the current plant is projected for three to five years. Management has invested $200,000 annually in growth stocks. Its current investment portfolio, which is held primarily as protection against a business downturn, is valued at $1.2 million. Loans to shareholder-employees currently amount to $400,000. As McHale’s tax return preparer, what tax issues should you have your client consider?