Source: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section543&num=0&edition=prelim
Timestamp: 2020-01-29 21:22:16
Document Index: 140748128

Matched Legal Cases: ['§ 543', '§1', '§3', '§225', '§3', '§104', '§206', '§211', '§1901', '§2106', '§105', '§222', '§712', '§645', '§1899', '§1010', '§6279', '§1704', '§6023', '§532', '§413', '§17', '§207', '§401', '§401', '§6279', '§1899', '§1901', '§206', '§225', '§1', '§207', '§6279', '§645', '§211', '§2106', '§206', '§3', '§2', '§6280', '§645']

[USC02] 26 USC 543: Personal holding company income
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26 USC 543: Personal holding company income Text contains those laws in effect on January 28, 2020
Dividends, interest, royalties (other than mineral, oil, or gas royalties or copyright royalties), and annuities. This paragraph shall not apply to-
(E) interest received by a broker or dealer (within the meaning of section 3(a)(4) or (5) of the Securities and Exchange Act of 1934) in connection with-
The adjusted income from rents; except that such adjusted income shall not be included if-
The adjusted income from mineral, oil, and gas royalties; except that such adjusted income shall not be included if-
(C) the sum of the deductions which are allowable under section 162 (relating to trade or business expenses) other than-
Copyright royalties; except that copyright royalties shall not be included if-
(B) the personal holding company income for the taxable year computed-
(C) the sum of the deductions which are properly allocable to such royalties and which are allowable under section 162, other than-
(C) For purposes of the limitation in subparagraph (B), personal holding company income shall be computed-
The term "ordinary gross income" means the gross income determined by excluding-
From the gross income from rents (as defined in the second sentence of paragraph (3) of this subsection) subtract the amount allowable as deductions for-
From the gross income from mineral, oil, and gas royalties described in paragraph (4), and from the gross income from working interests in an oil or gas well, subtract the amount allowable as deductions for-
There shall be excluded-
The term "adjusted income from rents" means the gross income from rents, reduced by the amount subtracted under paragraph (2)(A) of this subsection. For purposes of the preceding sentence, the term "rents" means compensation, however designated, for the use of, or right to use, property, and the interest on debts owed to the corporation, to the extent such debts represent the price for which real property held primarily for sale to customers in the ordinary course of its trade or business was sold or exchanged by the corporation; but such term does not include-
For purposes of this section, the term "active business computer software royalties" means any royalties-
The requirements of this paragraph are met if the royalties described in paragraph (1)-
(B) are attributable to computer software which-
For purposes of subparagraph (A), no deduction shall be taken into account with respect to compensation for personal services rendered by the 5 individual shareholders holding the largest percentage (by value) of the outstanding stock of the corporation. For purposes of the preceding sentence-
The requirements of this paragraph are met if the sum of-
For purposes of this paragraph, personal holding company income shall be computed-
(ii) without regard to interest income during any taxable year-
(Aug. 16, 1954, ch. 736, 68A Stat. 186 ; Pub. L. 86–435, §1(a), (b), Apr. 22, 1960, 74 Stat. 77 ; Pub. L. 87–403, §3(c), Feb. 2, 1962, 76 Stat. 6 ; Pub. L. 88–272, title II, §225(d), (k)(2), Feb. 26, 1964, 78 Stat. 81 , 93; Pub. L. 88–484, §3(a), Aug. 22, 1964, 78 Stat. 598 ; Pub. L. 89–809, title I, §104(h)(2), title II, §206(a), (b), Nov. 13, 1966, 80 Stat. 1559 , 1578, 1579; Pub. L. 94–455, title II, §211(a), title XIX, §§1901(b)(32)(D), 1906(b)(13)(A), title XXI, §2106(a), Oct. 4, 1976, 90 Stat. 1544 , 1800, 1834, 1902; Pub. L. 94–553, §105(d), Oct. 19, 1976, 90 Stat. 2599 ; Pub. L. 97–248, title II, §222(e)(6), Sept. 3, 1982, 96 Stat. 480 ; Pub. L. 98–369, div. A, title VII, §712(i)(3), July 18, 1984, 98 Stat. 948 ; Pub. L. 99–514, title VI, §645(a)(1), (2), (4), title XVIII, §1899A(18), Oct. 22, 1986, 100 Stat. 2289 , 2291, 2959; Pub. L. 100–647, title I, §1010(f)(5), title VI, §6279(a), Nov. 10, 1988, 102 Stat. 3454 , 3754; Pub. L. 104–188, title I, §1704(t)(6), Aug. 20, 1996, 110 Stat. 1887 ; Pub. L. 105–206, title VI, §6023(9), July 22, 1998, 112 Stat. 825 ; Pub. L. 106–170, title V, §532(c)(2)(E), Dec. 17, 1999, 113 Stat. 1930 ; Pub. L. 108–357, title IV, §413(c)(8), Oct. 22, 2004, 118 Stat. 1507 ; Pub. L. 109–304, §17(e)(3), Oct. 6, 2006, 120 Stat. 1708 ; Pub. L. 113–295, div. B, title II, §207(a), Dec. 19, 2014, 128 Stat. 4072 ; Pub. L. 115–141, div. U, title IV, §401(a)(134), (135), Mar. 23, 2018, 132 Stat. 1190 .)
2018-Subsec. (a)(2)(B)(ii). Pub. L. 115–141, §401(a)(134), substituted "section 563(c)" for "section 563(d)".
2014-Subsec. (a)(1)(C) to (E). Pub. L. 113–295 added subpar. (C) and redesignated former subpars. (C) and (D) as (D) and (E), respectively.
2006-Subsec. (a)(1)(B). Pub. L. 109–304 substituted "chapter 533 or 535 of title 46, United States Code" for "section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)".
2004-Subsec. (b)(1). Pub. L. 108–357 inserted "and" at end of subpar. (A), substituted a period for ", and" at end of subpar. (B), and struck out subpar. (C) which read as follows: "in the case of a foreign corporation all of the outstanding stock of which during the last half of the taxable year is owned by nonresident alien individuals (whether directly or indirectly through foreign estates, foreign trusts, foreign partnerships, or other foreign corporations), all items of income which would, but for this subparagraph, constitute personal holding company income under any paragraph of subsection (a) other than paragraph (7) thereof:".
1999-Subsec. (a)(1)(D)(i). Pub. L. 106–170 substituted "1221(a)(1)" for "1221(1)".
1998-Subsec. (d)(5)(A)(ii). Pub. L. 105–206 substituted "section 563(d)" for "section 563(c)".
1996-Subsec. (a)(2)(B)(ii). Pub. L. 104–188 substituted "563(d)" for "563(c)".
1988-Subsec. (a)(1)(D). Pub. L. 100–647, §6279(a), added subpar. (D).
1986-Subsec. (a)(1)(B). Pub. L. 99–514, §1899A(18), substituted "46 U.S.C. App." for "46 U.S.C.".
1984-Subsec. (a)(1)(C). Pub. L. 98–369 struck out subpar. (C) providing for nonapplication of par. (1) to dividends to which section 302(b)(4) would apply if the corporation were an individual.
1982-(a)(1)(C). Pub. L. 97–248 added subpar. (C).
1976-Subsec. (a)(1). Pub. L. 94–455, §1901(b)(32)(D), inserted in subpar. (B) "(46 U.S.C. 1161 or 1177)" after "Merchant Marine Act, 1936", and struck out subpar. (C) relating to a dividend distribution of divested stock.
1966-Subsec. (a)(2). Pub. L. 89–809, §206(b)(1), struck out provision that royalties received for the use of, or for the privilege of using, a patent, invention, model, or design, secret formula, process, or other similar property right be treated as rent if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers and if the amount constituting rent from such leases to customers meets the requirement of subparagraph (A).
1964-Subsec. (a). Pub. L. 88–272, §225(d), amended subsec. (a) generally, and among other changes, substituted "adjusted ordinary gross income" for "gross income", provided, relative to rental income, that in addition to the 50-percent test of par. (2)(A), now applied on the basis of adjusted income from rents and adjusted ordinary gross income, a second test for exclusion shall be whether the sum on the dividends paid during the taxable year, the dividends paid on the last day of the year, and the consent dividends for the taxable year, equals or exceeds the amount by which the personal holding company income for the year exceeds 10 percent of the ordinary gross income, relative to mineral, oil, and gas royalties, that in addition to the 50-percent test of par. (3)(A), now applied on the basis of adjusted ordinary gross income, and the 15-percent test of par. (3)(C), from which test have been excluded deductions "specifically allowable under sections other than section 162" and is also now applied on the basis of adjusted gross income, the royalties shall be excluded if the personal holding company income for the taxable year is not more than 10 percent of the ordinary gross income, relative to copyright royalties, retained the 50-percent test as in par. (4)(A), making it applicable to ordinary gross income, included in the computation of the income for the taxable year the adjusted income from rents and the adjusted income from mineral, oil, and gas royalties, excluded from the sum of deductions allocable to royalties, deductions specifically allowable under sections other than 162, and changed the requirement that deductions constitute 50 percent or more of gross income to provide that they must equal 25 percent of ordinary gross income reduced by royalties paid and by depreciation deductions with respect to copyrights, relative to produced film rents, that they be treated on their own basis and not as rentals, and defined "produced film rents", relative to use of corporation property by shareholders, that personal holding company income includes copyright royalties and the adjusted income from mineral, oil, and gas royalties, eliminated gains from the sale or other disposition of any interest in an estate or trust, from the sale or exchange of stock or securities, and from futures transactions in any commodity, and also definition of "rents". See subsec. (b)(3).
1962-Subsec. (a)(1). Pub. L. 87–403 prescribed conditions making inapplicable the provisions of the paragraph to dividend distribution of divested stock.
1960-Subsec. (a)(1). Pub. L. 86–435, §1(b)(1), excluded copyright royalties.
Pub. L. 113–295, div. B, title II, §207(b), Dec. 19, 2014, 128 Stat. 4072 , provided that: "The amendments made by this Act [probably means this section, section 207 of title II of div. B of Pub. L. 113–295, which amended this section] shall apply to taxable years ending on or after the date of the enactment of this Act [Dec. 19, 2014]."
Pub. L. 100–647, title VI, §6279(b), Nov. 10, 1988, 102 Stat. 3754 , provided that: "The amendments made by this section [amending this section] shall apply to interest received after the date of the enactment of this Act [Nov. 10, 1988], in taxable years ending after such date."
Pub. L. 99–514, title VI, §645(e), Oct. 22, 1986, 100 Stat. 2292 , provided that: "The amendments made by subsection (a) [amending this section and section 553 of this title] shall apply to royalties received before, on, and after December 31, 1986."
Pub. L. 94–455, title II, §211(b), Oct. 4, 1976, 90 Stat. 1545 , provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years ending on or after December 31, 1975."
Pub. L. 94–455, title XXI, §2106(b), Oct. 4, 1976, 90 Stat. 1903 , provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1976."
Pub. L. 89–809, title II, §206(c), Nov. 13, 1966, 80 Stat. 1579 , provided that: "The amendments made by subsections (a) and (b) [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Nov. 13, 1966]. Such amendments shall also apply, at the election of the taxpayer (made at such time and in such manner as the Secretary or his delegate may prescribe), to taxable years beginning on or before such date and ending after December 31, 1965."
Pub. L. 88–484, §3(b), Aug. 22, 1964, 78 Stat. 598 , provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1963."
Pub. L. 86–435, §2, Apr. 22, 1960, 74 Stat. 78 , provided that: "The amendments made by the first section of this Act [amending this section and sections 544 and 553 of this title] shall apply only with respect to taxable years beginning after December 31, 1959."
Pub. L. 100–647, title VI, §6280, Nov. 10, 1988, 102 Stat. 3754 , provided that:
"(a) General Rule.-For purposes of subtitle A of the 1986 Code, the term 'personal holding company income' shall not include any dividend received by a qualified bank holding company from a 25-percent owned bank during any taxable year ending in 1989 or 1990.
"(b) $3,000,000 Limitation.-The aggregate amount excluded from the personal holding company income of any qualified bank holding company under subsection (a) for the taxable year shall not exceed $3,000,000.
"(c) Qualified Bank Holding Company.-For purposes of this section, the term 'qualified bank holding company' means any bank holding company (as defined in section 2(a) of the Bank Holding Company Act of 1956 [12 U.S.C. 1841(a)]) if 80 percent or more (by value) of the assets of such company at all times during the taxable year consist of stock in 1 or more 25-percent owned banks.
"(d) 25-Percent Owned Bank.-For purposes of this section, the term '25-percent owned bank' means any bank (as defined in section 581 of the 1986 Code) if at least 25 percent of the stock of such bank (by vote and value) is owned by the bank holding company."
Pub. L. 99–514, title VI, §645(b)–(d), Oct. 22, 1986, 100 Stat. 2292 , provided that:
"(b) Special Rules for Broker-Dealers.-In the case of a broker-dealer which is part of an affiliated group which files a consolidated Federal income tax return, the common parent of which was incorporated in Nevada on January 27, 1972, the personal holding company income (within the meaning of section 543 of the Internal Revenue Code of 1986) of such broker-dealer, shall not include any interest received after the date of the enactment of this Act [Oct. 22, 1986] with respect to-
"(c) Special Rule for Royalties Received by Qualified Taxpayer.-
"(1) In general.-Any qualified royalty received or accrued in taxable years beginning after December 31, 1981, by a qualified taxpayer shall be treated in the same manner as a royalty with respect to software is treated under the amendments made by this section [amending this section and section 553 of this title].
"(2) Qualified taxpayer.-For purposes of this subsection, a qualified taxpayer is any taxpayer incorporated on September 7, 1978, which is engaged in the trade or business of manufacturing dolls and accessories.
"(3) Qualified royalty.-For purposes of this subsection, the term 'qualified royalty' means any royalty arising from an agreement entered into in 1982 which permits the licensee to manufacture and sell dolls and accessories.
"(d) Special Rule for Treatment of Active Business Computer Royalties for S Corporation Purposes.-In the case of a taxpayer which was incorporated on May 3, 1977, in California and which elected to be taxed as an S corporation for its taxable year ending on December 31, 1985, any active business computer royalties (within the meaning of section 543(d) of the Internal Revenue Code of 1986 as added by this Act) which are received by the taxpayer in taxable years beginning after December 31, 1984, shall not be treated as passive investment income (within the meaning of section 1362(d)(3)(D) [now section 1362(d)(3)(C)]) for purposes of subchapter S of chapter 1 of such Code."