### Question
How does the law define family-owned corporation?


### Answer
Under *26 U.S.C. § 354*, **family-owned corporation** is defined as:

> any corporation which is described in clause (i) of section 447(d)(2)(C) throughout the 8-year period beginning on the date which is 5 years before the date of the recapitalization

#### Citation:
  - *26 U.S.C. § 354*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter C-Corporate Distributions and Adjustments > PART III-CORPORATE ORGANIZATIONS AND REORGANIZATIONS > Subpart B-Effects on Shareholders and Security Holders**

