Cpa 01995 type1 mc 6 cpa 01995 are c03 1 a d corr ans

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: e ordinary loss. In this instance, no ordinary loss is available to Jackson because he is not the original owner of the stock. CPA-01995 Type1 M/C 6. CPA-01995 ARE C03 #1 A-D Corr Ans: C PM#6 R 3-01 Page 39 Which of the following is not true with regard to personal holding companies (PHCs)? a. The additional tax (penalty) is self-assessed by the PHC. b. Personal holding companies are not subject to the accumulated earnings tax. c. Personal holding companies, as specifically defined by the Code, are corporations that meet certain "closely-held" ownership criteria and have over 50% of their adjusted gross income consisting of net rent (less than 50% of ordinary gross income), taxable interest, most royalties, and dividends from an unrelated domestic corporation. d. There is no penalty if net earnings are distributed, as the penalty only applies to income that has not been distributed. CPA-01995 Explanation Choice "c" is correct. While most of the information in the item is correct, it is when over 60% of the adjusted gross income of a closely-held (more than 50% owned by 5 or fewer individuals either directly or indirectly at any time during the last h...
View Full Document

Ask a homework question - tutors are online