CLIENT 1 - Client sold his business and now is left with a C Corporation with assets that consist of cash, stocks and bonds. His income for the current year is capital loss $4,000, interest income $2,000 and expenses (primarily professional fees) of $5,000. I know he is subject to the PHC rules but I am unclear as to whether its on net income or gross PHC income. Any suggestions on avoiding the tax? Any assistance would be appreciated.

CLIENT 2 - Client has a company (C Corp.) that leases equipment to his S corp. construction company. For the last few years it has reported a net loss. This year the company has a rental loss but has capital gains from the sale of fixed assets. Would this company be subject to PHC tax? As of the first of the year the company will not be in the business of selling heavy equipment.

Thanks in advance.