# Enrolled Agent Exam [Part 2] 19, Accumulated Earnings Tax and PHC Tax

Page: https://stenobird.com/podcast/finance-exam-prep-7658413/enrolled-agent-exam-part-2-19-accumulated-earnings-tax-and-phc-tax
Text version: https://stenobird.com/podcast/finance-exam-prep-7658413/enrolled-agent-exam-part-2-19-accumulated-earnings-tax-and-phc-tax.md
Podcast: [Finance Exam Prep](https://stenobird.com/podcast/finance-exam-prep-7658413)
Published: 2026-05-16T22:41:20+00:00
Episode link: https://open-exam-prep.com/
Audio file: https://episodes.captivate.fm/episode/03578dfd-7ffc-4b87-808a-7360b3f1d5a6.mp3
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Duration seconds: 198

## Resource

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The Accumulated Earnings Tax is a 20% penalty on C-corps retaining earnings beyond reasonable business needs, with a minimum credit of $250,000 ($150,000 for PSCs). - The Personal Holding Company (PHC) Tax is a 20% penalty on certain C-corps that meet both a 60% passive income test and a 50% ownership test by five or fewer individuals. - A common exam trap is identifying what constitutes 'reasonable business needs' for the AET; vague or indefinite plans for expansion do not qualify. - The PHC tax rules are based on objective income and ownership tests, whereas the AET involves subjective intent to avoid shareholder taxes. - A corporation cannot be subject to both taxes in the same year; the PHC tax takes priority if the corporation meets the criteria for both. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

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## Transcript

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