§543 Personal holding company income

section 3(a)(4) and (5) of the Securities and Exchange Act of 1934, referred to in subsec. (a)(1)(E), is classified to section 78c(a)(4) and (5) of Title 15, Commerce and Trade.

2025—Subsec. (d)(4)(A)(i). Pub. L. 119–21 inserted “174A,” after “174,”. 2018—Subsec. (a)(2)(B)(ii). Pub. L. 115–141, § 401(a)(134), substituted “section 563(c)” for “section 563(d)”. Subsec. (d)(5)(A)(ii). Pub. L. 115–141, § 401(a)(135), 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). Subsec. (c). Pub. L. 100–647, § 1010(f)(5), substituted “other than life insurance companies” for “other than life or mutual” in heading and “other than a life insurance company” for “other than life or mutual” in text. 1986—Subsec. (a)(1)(B). Pub. L. 99–514, § 1899A(18), substituted “46 U.S.C. App.” for “46 U.S.C.”. Subsec. (a)(1)(C). Pub. L. 99–514, § 645(a)(1), added subpar. (C). Subsec. (a)(4). Pub. L. 99–514, § 645(a)(4)(A), inserted “This paragraph shall not apply to active business computer software royalties.” Subsec. (b)(3)(E). Pub. L. 99–514, § 645(a)(4)(B), added subpar. (E). Subsec. (d). Pub. L. 99–514, § 645(a)(2), added subsec. (d). 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. Subsec. (a)(4). Pub. L. 94–553 struck out “(other than by reason of section 2 or 6 thereof)” after “title 17 of the United States Code”. Subsec. (a)(5)(B). Pub. L. 94–455, § 211(a), inserted “In the case of a producer who actually participates in the production of the film, such term includes an interest in the proceeds or profits from the film, but only to the extent such interest is attributable to such active participation”. Subsec. (a)(6). Pub. L. 94–455, § 2106(a), redesignated existing provisions as subpars. (A), (B), and (C) and, as redesignated, inserted in subpar. (A) “tangible” after “right to use” and in subpar. (C) inserted exclusions from income embodied in cl. (ii). Subsec. (b)(2)(A), (B), (D). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”. 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). Subsec. (b)(1)(C). Pub. L. 89–809, § 104(h)(2), added subpar. (C). Subsec. (b)(2)(D). Pub. L. 89–809, § 206(b)(2), added subpar. (D). Subsec. (b)(3). Pub. L. 89–809, § 206(a), struck out “amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4)), nor produced film rents (as defined in subsection (a)(5)(B)).” after “but does not include”, and added subpars. (A) to (D). 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). Subsec. (a)(2). Pub. L. 88–484 inserted sentence requiring royalties received for the use of, or for the privilege of using, a patent, invention, model, or design (whether or not patented), secret formula or process, or any other similar property right to 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 (computed without regard to this sentence) constituting rent from such leases to customers meets the requirements of subparagraph (A). Subsec. (b). Pub. L. 88–272, § 225(d), added subsec. (b). Former subsec. (b), which provided that gross income and personal holding company income determined with respect to transactions relating to gains from stock and security transactions, and with respect to transactions relating to gains from commodity transactions, should include only the excess of gains over losses from such transactions, was struck out. Subsec. (d). Pub. L. 88–272, § 225(k)(2), struck out subsec. (d) which related to special adjustment on disposition of antitrust stock received as a dividend. 1962—Subsec. (a)(1). Pub. L. 87–403 prescribed conditions making inapplicable the provisions of the paragraph to dividend distribution of divested stock. Subsec. (d). Pub. L. 87–403 added subsec. (d). 1960—Subsec. (a)(1). Pub. L. 86–435, § 1(b)(1), excluded copyright royalties. Subsec. (a)(6). Pub. L. 86–435, § 1(b)(2), inserted sentence providing that copyright royalties constitute personal holding company income. Subsec. (a)(9). Pub. L. 86–435, § 1(a), added par. (9).

of 2025 AmendmentAmendment by Pub. L. 119–21 applicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2024, subject to election for retroactive application by certain small businesses and election to deduct certain unamortized amounts paid or incurred in taxable years beginning before Jan. 1, 2025, see section 70302(e), (f) of Pub. L. 119–21, set out as an

note under section 174A of this title.

of 2014 Amendment Pub. L. 113–295, div. B, title II, § 207(b), Dec. 19, 2014, 128 Stat. 4072, provided that: “The

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].”

of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see section 413(d)(1) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004

note under section 1 of this title.

of 1999 AmendmentAmendment by Pub. L. 106–170 applicable to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after Dec. 17, 1999, see section 532(d) of Pub. L. 106–170, set out as a note under section 170 of this title.

of 1988 AmendmentAmendment by section 1010(f)(5) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Pub. L. 100–647, title VI, § 6279(b), Nov. 10, 1988, 102 Stat. 3754, provided that: “The

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.”

of 1986 Amendment Pub. L. 99–514, title VI, § 645(e), Oct. 22, 1986, 100 Stat. 2292, provided that: “The

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.”

of 1984 AmendmentAmendment by Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title.

of 1982 AmendmentAmendment by Pub. L. 97–248 applicable to distributions after Aug. 31, 1982, with exceptions for certain partial liquidations, see section 222(f) of Pub. L. 97–248, set out as a note under section 302 of this title.

of 1976 AmendmentAmendment by Pub. L. 94–553 effective Jan. 1, 1978, see section 102 of Pub. L. 94–553, set out as an

of 1966 AmendmentAmendment by section 104(h)(2) of Pub. L. 89–809 applicable with respect to taxable years beginning after Dec. 31, 1966, see section 104(n) of Pub. L. 89–809, set out as a note under section 11 of this title. Pub. L. 89–809, title II, § 206(c), Nov. 13, 1966, 80 Stat. 1579, provided that: “The

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

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.”

of 1964 Amendment 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.” Amendment by Pub. L. 88–272 applicable to taxable years beginning after Dec. 31, 1963, see section 225(l) of Pub. L. 88–272, set out as a note under section 316 of this title.

of 1962 AmendmentAmendment by Pub. L. 87–403 applicable only with respect to distributions made after Feb. 2, 1962, see section 3(g) of Pub. L. 87–403, set out as a note under section 312 of this title.

of 1960 Amendment Pub. L. 86–435, § 2, Apr. 22, 1960, 74 Stat. 78, provided that: “The

Not Required Until January 1, 1989For provisions directing that if any

made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.