Which of the following actions cannot be used to eliminate a possible personal holding company tax liability involving a corporation owned by a mother and a father?
A)Sell additional stock to other family members.
B)Make a cash distribution within 2 1/2 months of the end of the tax year.
C)Make a deficiency distribution within 90 days of the date on which the IRS determines that a personal holding company liability is owed.
D)Liquidate the corporation.

Question

Quizplus · Accepted Answer

Selling additional stock to other family members does not necessarily eliminate personal holding company tax liability, as it may not change the concentration of ownership or the nature of the income. The other options directly address reducing or eliminating the potential tax liability by distributing income or liquidating the corporation.

Which of the Following Actions Cannot Be Used to Eliminate