A corporation whose only source of income is rental income will not be subject to the personal holding company penalty tax.

Question

Quizplus · Accepted Answer

The personal holding company penalty tax is typically imposed on corporations whose income consists mainly of passive sources such as dividend income, interest income, and royalties. Although rental income can also be considered passive income, it is not specifically listed as a source of income that triggers the personal holding company penalty tax. Therefore, a corporation that only earns rental income should not be subject to this tax.

A Corporation Whose Only Source of Income Is Rental Income