Edge Corp. met the stock ownership requirements of a personal holding company. What sources of income must Edge consider to determine if the income requirements for a personal holding company have been met?
I.
Interest earned on tax-exempt obligations.
II.
Dividends received from an unrelated domestic corporation.
Interest is normally included in personal holding company income, but only if it is included in the receiving corporation's gross income. Since interest income from tax-exempt obligations is not included in gross income, it is not personal holding company income.
II.
Dividend income from unrelated domestic corporations is personal holding company income.
Choices "a", "c", and "d" are incorrect. Each of these answers treats I or II incorrectly.
