[Isaac]

Wiley Book 2012

Module 38 (Corporate Taxation)

Multiple Choice # 117

It talks about “Kee Holding Corp. and their Personal Holding Company Tax.

It says they have 8 unrelated equal stockholders.

But then, in the answer, it says the “5 or fewer owns more than 50%” test is NOT met and their PHC liability is zero.

But I think it IS met. If you have 8 equal shareholders, then each one owns 12.5%. Multiply that by 5 and you get 62.5%. So, 5 shareholders own 62.5% of the stock. In my mind, that test is met. Am I missing something?

FAR...80...Yaeger...Nov/2011
AUD...Exam...Oct/2012
REG
BEC

[nolifecpa]

You are right. Actually, 9 shareholders max can have > 50% ownership

EXAMPLE: (100/9 owners) * 5 owners = 56%

Looks like another wiley typo

REG-65,71,74,73,70,74,79
BEC-60's,60's,69,71,76*,78
FAR-67,66,65,79
AUD-54,60's,65,83*,69,80
*expired

DONE

[nolifecpa]

You are right. Actually, 9 shareholders max can have > 50% ownership

EXAMPLE: (100/9 owners) * 5 owners = 56%

Looks like another wiley typo

REG-65,71,74,73,70,74,79
BEC-60's,60's,69,71,76*,78
FAR-67,66,65,79
AUD-54,60's,65,83*,69,80
*expired

DONE

[mcarras]

The 2013 version of this question revises the number of shareholders to 80. Then, the question would make sense.

[mcarras]

The 2013 version of this question revises the number of shareholders to 80. Then, the question would make sense.

[Author]

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