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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 122667  
Subject: Re: complicate vacation home transaction Date: 2/6/2004 7:08 PM
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Just found this on IRS site, which seems to say there will be a tax savings:

PHC's are a rather esoteric beast. While I am generally aware of them, I've never actually worked with one.

The way I read things, (and it was a VERY quick read - I don't have a lot of time, but found the topic interesting) the PHC tax is in addition to the regular corporate tax. So in your scheme, the corporation would pay the 15% tax on the $10k of income, leaving $8,500 (less state taxes IMHO). THEN the PHC tax gets added in as 15% of $8500, or another $1275.

My bottom line:
1. This would definitely be a Personal Holding Company.
2. Personal Holding Companies are not a DIY undertaking. Get professional help.

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