4.4 Other Taxes

1. Personal Holding Company Tax

Personal Holding Company (PHC)
(1) Stock ownership: more than 50% owned by 5 or fewer individuals
(2) Gross income: more than 60% of adjusted ordinary gross income as PHC income consisting of dividends, taxable interest, royalties, and net rent.

1) Additional tax assessed
2) PHC tax calculation
Taxable income
- Dividend payments (includes payment within 3.5 months and consent dividend)
= Undistributed income x 20%

3) Consent dividend: not actually distributed, but shareholders include it in gross income

4) Self-assessed tax: Schedule PH

2. Accumulated Earnings Tax (AET)

1) Additional tax assessed
2) Not self-assessed tax
3) AET calculation
Taxable income
- Dividend payments (includes payment within 3.5 months and consent dividend)
- Accumulated earnings credit
= current accumulated taxable income x 20%

(!) Accumulated earnings credit
Greater of (a) $250,000 ($150,000 PSC) or (b) reasonable needs of the business