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A PHC is a corporation that is not an excluded corporation and meets (1) the stock ownership requirement and (2) the income requirement. Excluded corporations include, for example, Sec. 501 tax-exempt organizations, banks, life insurance companies, and foreign corporations (Sec. 542(c)).
Personal Holding Company The Income Test states that at least 60% of the corporations adjusted ordinary gross income for the tax year is from certain dividends, interest, rent, royalties, and annuities.
A personal holding company (PHC) is a C corporation in which more than 50% of the value of its outstanding stock is owned (directly or indirectly) by five or fewer individuals and which receives at least 60% of its adjusted ordinary gross income from passive sources.
Form 1120 Schedule G: What startup founders need to know This form helps the IRS track individuals or entities owning 20% or more of the corporation, or if one shareholder controls 50% or more of the total voting power of all stock. A huge percentage of the VC-backed startups that we work with require Schedule G.
Personal Holding Companies (PHCs) are designed to manage passive income streams like dividends, rents, and royalties. PHCs are subject to specific IRS rules, including the Income and Stock Ownership Tests, which determine their classification.

People also ask

Purpose of Schedule Use Schedule PH to figure the personal holding company (PHC) tax.
PHC income generally consists of the following sources of (primarily) passive income: Dividends. Interest minus certain amounts excluded under Internal Revenue Code 543(a)(1) and Internal Revenue Code 543(b)(2)(C) Royalties minus certain expenses allowed under Internal Revenue Code 543(b)(2)(B)
A Personal Service Corporation These services can be in either accountancy, law, health care, actuarial science, engineering, performing arts, consulting or architecture. Organizing this way allows the firm to enjoy many of the benefits of a corporation.

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