In which of the following situations will Small Corporation be deemed to be a PHC? Assume that personal holding company income comprises more than 60% of Small’s adjusted ordinary gross income.
a. Art owns 100% of Parent Corporation stock, and Parent owns 100% of Small’s stock. Parent and Small file separate tax returns.
b. Art owns one-third of Small’s stock. The PRS Partnership, of which Phil, Robert, and Sue each have a one-third capital and profits interest, also owns one-third of Small’s stock. The remaining shares of Small’s stock are owned by 50 individuals unrelated to Art, Phil, Robert, and Sue.
c. Art and his wife, Becky, each own 20% of Small’s stock. The remaining shares of Small’s stock are owned by the Whitaker Family Trust. Becky and her three sisters each have a one-fourth beneficial interest in the trust.