Personal Holding Company

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Personal Holding Company

A corporation in which five or fewer persons control at least half of the company's stock and in which at least 60% of the company's income is passive income from companies it owns. Because personal holding companies may be used by the persons who control them to avoid personal taxes, the U.S. tax system imposes a 15% tax on personal holding company profits in addition to corporate taxes.
References in periodicals archive ?
Because of this, under some circumstances personal holding companies can function as a particularly effective means of transferring future appreciation to other family members.
Prior to enactment of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), the personal holding company provisions imposed a tax at the highest individual income tax rate, separate and in addition to the existing corporate tax on specifically defined undistributed income of personal holding companies.
7) The term does not include passive foreign investment companies, foreign investment companies, and foreign personal holding companies.
The rules related to foreign personal holding companies (FPHC) and foreign investment companies (FIC) have been repealed, and the AJCA makes a number of housekeeping changes to the Subpart F provisions of the IRC to prevent abuses.
The bills contain a provision that eliminates the rules applicable to foreign personal holding companies and foreign investment companies, excludes foreign corporations from the application of the personal holding company rules, and includes as subpart F foreign personal holding company income personal services contract income that is subject to the present-law personal holding company rules.
IRC section 1246(b) foreign investment companies, IRC section 1297 passive foreign investment companies (PFIC), and IRC section 552 foreign personal holding companies (FPHC) do not qualify.
6% of its capital for a 40% stake in the personal holding companies of businessman Antonio Champalimaud, who controls Mundial Cofianca.
The tax applies to all corporations except personal holding companies, foreign personal holding companies, exempt organizations and passive foreign investment companies, all of which are subject to special rules.
In addition to individual retail ARS investors, the buy-back offers include non-profit charitable organizations and religious corporations or entities, trusts, corporate trusts, corporations, pension plans, educational institutions, incorporated non-profit organizations, limited liability companies, limited partnerships, non-public companies, partnerships, personal holding companies and unincorporated associations that made individual ARS purchases and whose account value did not exceed $10 million.
Answer--IRC Section 541 imposes a 15% (in 2006) tax on companies classified as personal holding companies.
shareholders on income that has not been repatriated: the rules for (1) CFCs, (2) foreign personal holding companies (FPHCs) and (3) passive foreign investment companies (PFICs).

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