The Supreme Court's decision in Burwell v. Hobby Lobby finds that "closely-held corporations" are not required to provide workers with contraceptives — bringing a whole lot more attention to an arcane term from the Internal Revenue Service. Luckily, the IRS has previously spelled out in plain English in a FAQ from January 2014:
Question: Can you give me plain English definitions for the following: (1) a closely held corporation, (2) a personal holding corporation, and (3) a personal service corporation?
Generally, a closely held corporation is a corporation that:
Has more than 50% of the value of its outstanding stock owned (directly or indirectly) by 5 or fewer individuals at any time during the last half of the tax year; and
Is not a personal service corporation.
The definitions for the terms "directly or indirectly" and "individual" are in Publication 542, Corporations.
A closely held corporation is subject to additional limitations in the tax treatment of items such as passive activity losses, at-risk rules, and compensation paid to corporate officers.
According to Inc., 90 percent of all companies in the US are closely held:
Over 90 percent of all corporations in the US are closely held... http://t.co/CxDZ6ZUWFt— Alex Seitz-Wald (@aseitzwald) June 30, 2014