Gary’s Garage Inc. never paid a dividend and invested its after-tax earnings in tire company stock. It has no plans to expand and its working capital is ample. Gary owns 100 percent of the stock.

a. May Gary’s Garage be a PHC?

b. If Gary’s isa PHC nor liable for the PHC tax (since there is no UPHCI), may the accumulated earnings tax be imposed?

c. If Gary’s accumulated earnings are

$250,000 and current after-tax earnings are distributed, may the accumulated earnings tax be imposed?

d. Same as (c), except accumulated earnings are $200,000, but the marketable stocks purchased with them are worth $700,000.