### Question
How does Income Taxes define personal holding company?


### Answer
Under *26 U.S.C. § 542*, **personal holding company** is defined as:

> any corporation (other than a corporation described in subsection (c)) if—



#### (1) Adjusted ordinary gross income requirement


At least 60 percent of its adjusted ordinary gross income (as defined in section 543(b)(2)) for the taxable year is personal holding company income (as defined in section 543(a)), and



#### (2) Stock ownership requirement


At any time during the last half of the taxable year more than 50 percent in value of its outstanding stock is owned, directly or indirectly, by or for not more than 5 individuals

#### Citation:
  - *26 U.S.C. § 542*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter G-Corporations Used to Avoid Income Tax on Shareholders > PART II-PERSONAL HOLDING COMPANIES**

