Legal Definitions - personal holding company

A personal holding company is a type of holding company that is subject to special taxes and usually has a limited number of shareholders. Most of its revenue comes from passive income such as dividends, interest, rent, and royalties.

For example, if John owns a holding company that only invests in stocks and earns most of its income from dividends, it may be considered a personal holding company. The company would be subject to additional taxes and regulations because of its status as a personal holding company.

This type of company is different from a diversified holding company, which controls several unrelated companies or businesses, or a parent company, which owns and controls other companies.