Question
Consider the following situations. a. Art owns 100% of Parent Corporation stock, and Parent owns 100% of Small's stock. Parent and Small file separate tax
Consider the following situations.
a.
Art owns 100% of Parent Corporation stock, and Parent owns 100% of Small's stock. Parent and Small file separate tax returns.
b.
Art owns one-third of Small's stock. The PRS Partnership, of which Phil, Robert, and Sue each have a one-third capital and profits interest, also owns one-third of Small's stock. The remaining shares of Small's stock are owned by 50 individuals unrelated to Art, Phil, Robert, and Sue.
c.
Art and his wife, Becky, each own 20% of Small's stock. The remaining shares of Small' s stock are owned by the Whitaker Family Trust. Becky and her three sisters each have a one-fourth beneficial interest in the trust.
Assume that personal holding company income comprises more than 60% of Small's adjusted ordinary gross income.
In which of the situations will Small Corporation be deemed to be a PHC?
a. Art owns 100% of Parent Corporation stock, and Parent owns 100% of Small's stock. Parent and Small file separate tax returns.
Small
deemed to be a PHC because Art
all of Small's stock under the
Sec. 541 (2) PHC requirement.
Sec. 542 (a)(2) stock ownership requirement.
Sec. 544 stock attribution rules.
b. Art owns one-third of Small's stock. The PRS Partnership, of which Phil, Robert, and Sue each have a one-third capital and profits interest, also owns one-third of Small's stock. The remaining shares of Small's stock are owned by 50 individuals unrelated to Art, Phil, Robert, and Sue.
Small
is
is not
deemed to be a PHC because Art plus Phil, Robert, and Sue are
considered to own two-thirds of Small's stock.
a partnership and it does not qualified under the Sec. 544 stock attribution rules.
unrelated.
c. Art and his wife, Becky, each own 20% of Small's stock. The remaining shares of Small's stock are owned by the Whitaker Family Trust. Becky and her three sisters each have a one-fourth beneficial interest in the trust.
Small
is
is not
deemed to be a PHC because Becky Whitaker
is deemed to own all
is only deemed to own 40%
only owned 20%
all of Small's stock,
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