Family Holding Corporation

• Function

  • Removes assets from the estate
  • Retains control and enjoyment in the owner

• Limitation

  • Only the character of the asset held is changed
  • Could invite father-son rivalry, sibling jealousy, problems of succession, division between those working in the business and those who are not

• Tax Treatment

  • Tax-free transfer if under Sec. 40(C)(2)©
  • Minimum Corporate Income Tax
  • Improperly Accumulated Earnings Tax