Personal Holding Company Tax

[Debbie Campbell]

Schedule PH for 1120, Part V Excess expenses above rental income:

Is my understanding correct that If expenses (Depreciation, real estate taxes, uitilities, insurance and repairs) are more than rental income received this part needs to be filled in and the excess is added to personal holding company income subject to the 15% tax?
Otherwise, I can skip Part V and attache a statement listing the deductions with support, along with statement saying that rent was highest obtainable, property held in course of business carried on for profit and property is necessary to conduct the business.

Thank-you for your insight!
Debbie

[OldJack]

Schedule PH for 1120, Part V Excess expenses above rental income:

Is my understanding correct that If expenses (Depreciation, real estate taxes, uitilities, insurance and repairs) are more than rental income received this part needs to be filled in and the excess is added to personal holding company income subject to the 15% tax?

All part V is for is for you to calculate what the loss on the rental property is so that the loss can be added to personal holding company income (not a desirable thing). If the rental property is profitable you would not need to complete anything for part V.

Otherwise, I can skip Part V and attache a statement listing the deductions with support, along with statement saying that rent was highest obtainable, property held in course of business carried on for profit and property is necessary to conduct the business.

I don't know why you would be attaching a statement (where part V is calling for a statement) about the rent and expenses if you don't have to complete part V.

You should be sure that you even need to file a form 1120 Sch-PH. Rent income in many cases can be treated as exempt from personal holding company income and thereby keep the corp from being classified as a PHC. If you will send your email address to taxpoo@aol.com I will send you a worksheet that might help you check to see if you need to file Sch-PH and owe the tax. Its a .htm file worksheet that calculates and prints but does not save data.