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Personal Holding Company Test and Tax Calculator (Sections 541 and 542)

What does this come to under the current IRS rules?

The 60 percent income test, the five-owner stock test and the 20 percent tax on undistributed personal holding company income.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Personal holding company tax
$24,000
20 percent of undistributed PHC income
PHC income as a share of adjusted ordinary gross income
70.00%
Must be at least 60%
Against 100%
PHC income as a share of adjusted ordinary gross income70.00%
All results
MeasureResult
Personal holding company tax$24,000
PHC income as a share of adjusted ordinary gross income
Must be at least 60%
70.00%
Income testMet (60% or more)
StatusPersonal holding company
How this was worked out
Work shownrecomputed as you type
Income test: personal holding company income / adjusted ordinary gross income >= 60%
Stock test: more than 50% in value owned by not more than 5 individuals in the last half of the year
Tax = 20% x undistributed personal holding company income

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Income test: personal holding company income / adjusted ordinary gross income >= 60%
  • Stock test: more than 50% in value owned by not more than 5 individuals in the last half of the year
  • Tax = 20% x undistributed personal holding company income

How it works

A corporation is a personal holding company if it meets both tests in section 542(a): at least 60 percent of adjusted ordinary gross income is personal holding company income, and more than half the stock value is owned by five or fewer individuals at some time in the last half of the year. Corporations in the exceptions of section 542(c) are outside the definition.

The tax is 20 percent of undistributed personal holding company income, which is taxable income with the adjustments in section 545 less the dividends paid deduction. Enter that figure from your own section 545 computation, because this tool does not rebuild it. Rules that attribute stock ownership to individuals through entities are not modeled.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Which income counts as personal holding company income?

Section 542 refers to the definition in section 543. Use that section to classify your income.

What is the tax base?

Undistributed personal holding company income as defined in section 545. Enter your own computation.

What is the rate?

Section 541 sets 20 percent.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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