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Form 1120-SPH: 1120 (Schedule PH)
IRS Schedule PH (Form 1120) is used by corporations to compute the personal holding company (PHC) tax. It must be filed by corporations that meet both the PHC income test (at least 60% of adjusted ordinary gross income is PHC income) and the stock ownership requirement (more than 50% of stock owned by five or fewer individuals). The form includes a worksheet to determine if the tests are met.
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IRS Form 1120-SPH - 1120 (Schedule PH)
IRS Schedule PH (Form 1120) is used by corporations to compute the personal holding company (PHC) tax. It must be filed by corporations that meet both the PHC income test (at least 60% of adjusted ordinary gross income is PHC income) and the stock ownership requirement (more than 50% of stock owned by five or fewer individuals). The form includes a worksheet to determine if the tests are met.
Risk Radar
Scan points- 1Failing to file Schedule PH when both tests are met can result in unpaid PHC tax and penalties.
- 2Entering taxable income from Form 1120 line 28 without refiguring for section 443(b) if applicable.
- 3Failing to complete the Worksheet to compute adjusted ordinary gross income and the PHC income test percentage.
- 4Using deductions limited by at-risk or passive activity rules in PHC computations without allowing prior year deductions.
- 5Not excluding rents that meet both tests under section 543(a)(2) from PHC income.
Plain English
Schedule PH helps a corporation figure out if it owes the personal holding company tax. A corporation is a personal holding company if most of its income comes from passive sources like dividends and rents, and a small group of people own most of the stock. If both conditions are true, the corporation must fill out this schedule and pay the tax.
Submission Date
- Filing date: 2017-01-10 00:00:00
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when the corporation meets both the PHC income test (at least 60% of adjusted ordinary gross income is PHC income) and the stock ownership requirement (more than 50% of stock owned by five or fewer individuals during the last half of the tax year).
- Do not use it when the corporation does not meet both tests; Schedule PH is only for PHC tax computation.
- Check Form 1120 instructions instead when filing a corporate income tax return without PHC tax; Schedule PH is attached only if the corporation is a PHC.
Form selector
Use this form or another form?
Filing corporate income tax return
Schedule PH is attached to Form 1120; the PHC tax is computed on Schedule PH and entered on Schedule J (Form 1120).
✓ Check Form 1120 instructions for general filing requirements.
Reporting PHC tax on the return
PHC tax from Schedule PH line 26 is entered on Schedule J line 8.
✓ Confirm Schedule J is included with Form 1120.
Consent dividends
Attach to Schedule PH Part II line 2 for consent dividends.
✓ Ensure Forms 972 and 973 are completed and signed.
Dividend carryover from preceding years
Line 4 of Part II requires an attached computation of dividend carryover from first and second preceding tax years.
✓ Maintain records of prior years' dividends paid.
Deadline or filing window
The schedule must be attached to the corporation's income tax return. The due date for that return is not specified in these instructions. However, note that for tax years beginning after December 31, 2015, dividends paid after the end of the tax year and before the 16th day of the 4th month following the end of the tax year may be elected to be treated as paid during the tax year (see line 12 instructions).
Checklist
What you need before filling it out
Part I line 1 – Taxable income before NOL
Amount from Form 1120 line 28 · Form 1120
Part I line 2 – Contributions
Amount from Form 1120 line 19 · Form 1120
Part I line 3 – Excess expenses under section 545(b)(6)
Amount from Part V line 2 · Part V of Schedule PH
Part II line 1 – Dividends paid
Actual dividends paid during year, not including deficiency dividends or prior year dividends · Corporate records
Part II line 2 – Consent dividends
Forms 972 and 973 · Attached forms
Worksheet line 4a – Adjustments for rents
Deductions allocable to rents · Corporate books
Before you submit
- 1Confirm the corporation meets both the PHC income test and stock ownership requirement before completing Schedule PH.
- 2Complete Part I lines 1-4 using amounts from Form 1120 (lines 28 and 19) and Part V if applicable.
- 3Complete the Worksheet in the instructions to verify the PHC income test (line 6 must be 60% or more).
- 4If rents are excluded from PHC income, do not complete lines 18a-18c; otherwise enter rents and adjustments.
- 5Complete Part II (Dividends Paid Deduction) including consent dividends (attach Forms 972 and 973) and dividend carryover (attach computation).
- 6Compute PHC tax on Part III line 26 at 20% and enter the result on Schedule J (Form 1120) line 8.
- 7Attach Schedule PH to Form 1120 before filing; do not file separately.
- 8Keep a copy of the completed Schedule PH, all attachments, and the signed Form 1120 for your records.
- 9Verify the revision date on the form is November 2015 and instructions are December 2016.
How to file this form
- 1Determine if the corporation is a personal holding company using the stock ownership and income tests described in the instructions.
- 2Complete the Worksheet in the instructions to compute adjusted ordinary gross income and the PHC income percentage (line 6).
- 3Complete Part I of Schedule PH to compute undistributed personal holding company income, starting with taxable income from Form 1120.
- 4Complete Part II to compute the deduction for dividends paid, including consent dividends (attach Forms 972 and 973) and dividend carryover (attach computation).
- 5Complete Part III to compute the PHC tax by multiplying line 13 by 20% and entering the result on line 26.
- 6Enter the PHC tax from line 26 onto Schedule J (Form 1120) line 8 or the proper line of the appropriate tax return.
- 7Attach Schedule PH to Form 1120 and file the complete return with the IRS by the due date (including extensions).
- 8Retain a copy of the filed return, Schedule PH, and all attachments as proof of filing.
Known limitations
- 1Not applicable to corporations under the jurisdiction of a court in a title 11 or similar case (bankruptcy).
- 2Not applicable to foreign corporations unless they meet the PHC definition under U.S. tax law.
- 3Deductions and losses limited or suspended by at-risk, passive activity, or earnings stripping rules cannot be used in PHC computations; prior year deductions allowed under those rules are treated as current year deductions.
- 4Special rules apply for tax years ending in June regarding the election to treat dividends paid after year end as paid during the tax year.
- 5The form only computes PHC tax; it does not replace the requirement to file Form 1120 for corporate income tax.
Field map
Compact field-by-field guide
Entity Info
2 items
Full legal name of the corporation and its Employer Identification Number.
Current mailing address and date of incorporation.
Income
3 items
Total revenue from business operations before deducting costs.
Direct costs attributable to producing goods sold by the corporation.
Gross receipts minus cost of goods sold and returns/allowances.
Deductions
1 items
Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.
Tax
2 items
Total income minus total deductions.
Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.
Signatures
1 items
An authorized corporate officer must sign and date the return.
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Fillable formOpen in Editor->The current edition of Schedule PH (Form 1120) is Rev. November 2015, with instructions Rev. December 2016. The IRS provides a 'Future Developments' page at www.irs.gov/form1120 for any changes after publication; a new rule for dividends paid after year end applies to tax years beginning after December 31, 2015.
What changed or needs a fresh check
- Edition date — confirm the Schedule PH form reads 'Rev. November 2015' and the instructions read 'Rev. December 2016'.
- PHC tax rate — confirm the rate is 20% on line 26 of Part III.
- Dividend paid election — check if the corporation elects to treat dividends paid after year end and before the 16th day of the 4th month as paid during the tax year (special rules for June year ends).
- Stock ownership requirement — verify that more than 50% in value of outstanding stock is owned directly or indirectly by five or fewer individuals at any time during the last half of the tax year.
- Mailing address — not stated in the official source; use the Form 1120 instructions for where to mail the return.
- Signature — Schedule PH is attached to Form 1120; sign and date Form 1120, not the schedule.
Quick Facts
Downloads
After you file
- 1Retain a copy of the filed Schedule PH, Form 1120, and all attachments for at least 3 years after the return due date or filing date, whichever is later.
- 2If an error is discovered, file an amended Form 1120X with a corrected Schedule PH attached.
- 3Check the IRS account transcript or e-file acknowledgment to confirm the return was received and processed.
- 4Respond promptly to any IRS notice regarding PHC tax, providing documentation as requested.
- 5If the corporation later determines it was not a PHC, consider filing an amended return to remove Schedule PH and claim any overpaid tax.
Sources
- SRCInstructions p.1 — Schedule PH is used to figure the personal holding company (PHC) tax.
- SRCInstructions p.1 — Who Must File: A corporation that is a PHC must file Schedule PH by attaching it to its income tax return.
- SRCInstructions p.1 — PHC income test: At least 60% of the corporation's adjusted ordinary gross income for the tax year is PHC income.
- SRCInstructions p.1 — Stock ownership requirement: At any time during the last half of the tax year, more than 50% in value of the corporation's outstanding stock is directly or indirectly owned by five or fewer individuals.
- SRCForm p.1 — Part III line 26: PHC tax is 20% (multiply line 13 by 20%).
- SRCInstructions p.2 — Rents can be excluded from PHC income if both tests are met; do not complete lines 18a-18c.
- SRCForm p.2 — Part II line 2: Consent dividends require attachment of Forms 972 and 973.
- SRCForm p.2 — Part II line 4: Dividend carryover from first and second preceding tax years requires attached computation.
- SRCInstructions p.1 — For tax years beginning after December 31, 2015, a corporation can elect to treat dividends paid after year end and before the 16th day of the 4th month as paid during its tax year; special rules for June year ends.
- SRCInstructions p.4 — If line 6 is 60% or more and the stock ownership requirement is met, complete Parts III and IV.
Common confusion points
What is the PHC income test percentage?
The test requires at least 60% of adjusted ordinary gross income to be PHC income.
→ Check Worksheet line 6; if 60% or more and stock ownership test is met, the corporation is a PHC.
How do I compute adjusted ordinary gross income?
It is ordinary gross income adjusted by allocable deductions for rents, royalties, and working interests.
→ Follow the Worksheet instructions lines 1-5; each type of income is adjusted separately.
Can I exclude rents from PHC income?
Rents can be excluded if both the 50% test (PHC income excluding rents is less than 10% of ordinary gross income) and the 10% test (adjusted income from rents is 50% or more of adjusted ordinary gross income) are met.
→ Do not complete lines 18a-18c if rents are excluded; otherwise enter rents on line 18a.
What are consent dividends?
They are dividends that shareholders agree to treat as paid, even though not actually distributed, using Forms 972 and 973.
→ Attach completed Forms 972 and 973 to Schedule PH Part II line 2.
How do I treat dividends paid after year end?
For tax years beginning after Dec 31, 2015, dividends paid after year end and before the 16th day of the 4th month can be elected as paid during the tax year (special rules for June year ends).
→ See instructions for line 12; ensure election is properly documented.
What is the stock ownership requirement?
More than 50% in value of outstanding stock must be owned directly or indirectly by five or fewer individuals at any time during the last half of the tax year.
→ Review stock ownership records; indirect ownership rules apply (section 544).
Do I need to attach a separate worksheet?
The worksheet is part of the instructions and is not filed; it is used to determine if the PHC tests are met.
→ Complete the worksheet for your records; do not attach it to the return unless instructed.
What if my tax year ends in June?
Special rules apply for the dividend paid election; see instructions for line 12.
→ Check the instructions for line 12 regarding the 16th day of the 4th month for June year ends.
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Questions about IRS Form 1120-SPH
What is IRS Form 1120-SPH used for?
Schedule PH helps a corporation figure out if it owes the personal holding company tax. A corporation is a personal holding company if most of its income comes from passive sources like dividends and rents, and a small group of people own most of the stock. If both conditions are true, the corporation must fill out this schedule and pay the tax.
Who must file IRS Form 1120-SPH?
A corporation that is a personal holding company (PHC) must file Schedule PH. A corporation is a PHC if it meets both the PHC income test (at least 60% of adjusted ordinary gross income is PHC income) and the stock ownership requirement (more than 50% in value of outstanding stock is owned by five or fewer individuals at any time during the last half of the tax year).
What information does IRS Form 1120-SPH require?
Schedule PH collects information in four parts: Part I (Undistributed PHC Income Additions), Part II (PHC Income), Part III (PHC Tax Computation), and Part IV (Stock Ownership Requirement). A separate worksheet is used to compute adjusted ordinary gross income and the PHC income test percentage.
Where do I file IRS Form 1120-SPH?
Schedule PH is attached to the corporation's income tax return (Form 1120) and is filed at the same address or through the same e-file system as that return. No separate mailing address is provided in the instructions.
How do I complete IRS Form 1120-SPH?
First, complete Part I of Schedule PH and lines 1 through 5 of the Worksheet. Then complete Part II and line 6 of the Worksheet. If line 6 is 60% or more and the stock ownership requirement in Part IV is met, complete Parts III and IV to figure the PHC tax. Attach the completed schedule to Form 1120 and sign and date the return as usual.
What happens if IRS Form 1120-SPH is filed incorrectly?
Failure to file Schedule PH when required may result in the corporation owing the personal holding company tax, plus any applicable penalties and interest. The instructions state that a corporation that is a PHC must file Schedule PH and pay the PHC tax.
What is the PHC income test percentage?
The test requires at least 60% of adjusted ordinary gross income to be PHC income. Check Worksheet line 6; if 60% or more and stock ownership test is met, the corporation is a PHC.
How do I compute adjusted ordinary gross income?
It is ordinary gross income adjusted by allocable deductions for rents, royalties, and working interests. Follow the Worksheet instructions lines 1-5; each type of income is adjusted separately.
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