Personal Holding Company Tax

Personal Holding Company Tax

A 15% tax added to corporate taxes in the United States on corporations in which five or fewer persons control at least half of the company's stock and at least 60% of the company's income is passive income from companies it owns. This tax is levied to discourage the existence of personal holding companies.
References in periodicals archive ?
The tax preparer incorrectly concluded that the personal holding company tax did not apply.
If there were personal holding company income, a distribution could avoid the personal holding company tax of 15 percent in 2010.
However, under JGTRRA, the personal holding company tax was reduced and, for tax years beginning after 2002, the personal holding company tax is imposed at the rate of 15% of the undistributed personal holding company income, in addition to the regular corporate income tax and the minimum tax on certain tax preference items.
the flat tax, the accumulated earnings tax and the personal holding company tax.
And several C-corporation downsides, such as excess compensation, personal holding company tax and unreasonable accumulation of earnings are generally not problems for S-corporations.
Chapter 7 covers the determination of consolidated tax liability, delving into areas such as the alternative minimum tax, the personal holding company tax, and the accumulated earnings tax.
becoming subject to personal holding company tax for federal income tax purposes for 2005.
It should also be noted that if a dividend is paid from a TR, S to avoid personal holding company tax, when received by the REIT the dividend will not represent qualifying income for purposes of the 75% gross income test set forth under Sec.
Other corporate problems may also emerge, such as the accumulated excess earnings or personal holding company tax.
Since these tax liabilities could become substantial, the taxpayer and its advisors should review each CHC before year end so that steps may be taken to assure that the corporation does not owe the personal holding company tax.
TLC Beatrice said that the sale of its French food distribution business left it with a substantial cash position and that the payment of a special dividend will enable the company to eliminate its potential personal holding company tax liability while allowing its shareholders to participate in the company's increased profits.
A similar issue could arise with the personal holding company tax.

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