Here's what a "closely-held corporation" is

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?
Answer:
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

Will you support Vox’s explanatory journalism?

Most news outlets make their money through advertising or subscriptions. But when it comes to what we’re trying to do at Vox, there are a couple of big issues with relying on ads and subscriptions to keep the lights on:

First, advertising dollars go up and down with the economy. We often only know a few months out what our advertising revenue will be, which makes it hard to plan ahead.

Second, we’re not in the subscriptions business. Vox is here to help everyone understand the complex issues shaping the world — not just the people who can afford to pay for a subscription. We believe that’s an important part of building a more equal society. And we can’t do that if we have a paywall.

So even though advertising is still our biggest source of revenue, we also seek grants and reader support. (And no matter how our work is funded, we have strict guidelines on editorial independence.)

If you also believe that everyone deserves access to trusted high-quality information, will you make a gift to Vox today? Any amount helps.

One-Time Monthly Annual

$5/month

$10/month

$25/month

$50/month

Other

$

Yes, I'll give $5/month

Yes, I'll give $5/month

We accept credit card, Apple Pay, and Google Pay. You can also contribute via