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Simple English definitions for legal terms
personal holding company
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A quick definition of personal holding company:
A personal holding company is a type of company that owns stocks in other companies and makes money from things like rent, interest, and dividends. It usually has only a few owners and has to pay special taxes. It's like a piggy bank that collects money from other piggy banks.A more thorough explanation:
A personal holding company is a type of holding company that is subject to special taxes and usually has a limited number of shareholders. Most of its revenue comes from passive income such as dividends, interest, rent, and royalties.
For example, if John owns a holding company that only invests in stocks and earns most of its income from dividends, it may be considered a personal holding company. The company would be subject to additional taxes and regulations because of its status as a personal holding company.
This type of company is different from a diversified holding company, which controls several unrelated companies or businesses, or a parent company, which owns and controls other companies.