holding company

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A holding company is a company that owns part, a majority, or all of another company’s stock with the sole purpose of owning other companies’ stock.  A company is a personal holding company for the purposes of Section 542 of the Internal Revenue Code if at least 60% of the company's adjusted ordinary gross income for the tax year is from dividends, rent, interest, and royalties and if five or fewer individuals own a majority of the company's stock at some point during the latter half of the tax year.   A parent holding company refers to a company that owns enough stock in another company to control the election of its board of directors.