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To "Fail" the Passive Income Test and Thereby Avoid Personal

Question 50

Multiple Choice

To "fail" the passive income test and thereby avoid personal holding company status, a corporation can do any of the following except


A) Generate less adjusted ordinary gross income.
B) Switch investments from dividend-paying stocks to growth stocks.
C) Increase shareholder compensation by the amounts that otherwise would be invested to generate personal holding company income.
D) Replace personal holding company income with tax-exempt income, capital gains, or § 1231 gains.
E) Increase operating income without increasing passive income.

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