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.
Answer: C