Propose a plan in which you mitigate the potential

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Question: The personal holding company (PHC) tax penalizes taxpayers who enter into tax-motivated transactions designed to shelter passive income of closely held corporations from higher individual tax rates. Suppose you represent a professional athlete who is the majority owner of a corporation. The corporation has several personal service contracts with advertising agencies and endorsements for your client in addition to passive income. Propose a plan in which you mitigate the potential for the PHC tax on the client's corporation.

Reference no: EM132288771

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