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corporation. See Fulman v. United States, 434 U.S. 528, 531
(1978). The additional tax is imposed by section 541, which
provides:
In addition to other taxes imposed by this
chapter, there is hereby imposed for each taxable year
on the undistributed personal holding company income
(as defined in section 545) of every personal holding
company (as defined in section 542) a personal holding
company tax equal to 39.6 percent of the undistributed
personal holding company income.
A corporation is a personal holding company if two
requirements are satisfied. See sec. 542(a). Those two
requirements have been described as the "stock ownership" and
"tainted income" tests. See Kenyatta Corp. v. Commissioner, 86
T.C. 171 (1986), affd. 812 F.2d 577 (9th Cir. 1987). The "stock
ownership" test is satisfied if "At any time during the last half
of the taxable year more than 50 percent in value of * * * [the
corporation's] outstanding stock is owned, directly or
indirectly, by or for not more than 5 individuals." Sec.
542(a)(2). The "tainted income" test is satisfied where "At
least 60 percent of [the corporation's] adjusted ordinary gross
income (as defined in section 543(b)(2)) for the taxable year is
personal holding company income (as defined in section 543(a))".
Sec. 542(a)(1). Section 543(a), which defines personal holding
company income, provides in pertinent part:
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