[Verse 1] When a company hoards its cash and doesn't pay out The IRS might wonder what that's all about If you're keeping profits just to dodge the tax Section five-three-one will get you back on track There's a credit that protects you from the penalty bite Two-fifty thousand keeps most companies right But service corporations get a smaller deal One-fifty thousand is their credit ceiling [Chorus] Penalty taxes, they're watching what you do Accumulated earnings, personal holding too Two-fifty, one-fifty, know your credit line Section five-three-one and five-four-one combined [Verse 2] Personal holding companies face a different test When passive income makes up most of what's possessed If sixty percent or more comes from investments made Dividends and royalties, rent that tenants paid Five or fewer people own more than half the stock This penalty tax will give you quite a shock Section five-four-one will tax what you retain Unless distributions flow like cleansing rain [Chorus] Penalty taxes, they're watching what you do Accumulated earnings, personal holding too Two-fifty, one-fifty, know your credit line Section five-three-one and five-four-one combined [Bridge] These taxes exist to make sure money flows Not trapped in corporations where the revenue grows The government wants taxes paid on what you earn Not hidden in companies where profits churn [Verse 3] Manufacturing companies get the higher credit Service firms get less, that's how Congress said it Personal holding status has a two-part test Ownership concentration and income at rest Know these penalty taxes, plan your business right Keep distributions flowing to avoid the bite The tax code has these weapons to ensure compliance Don't let your corporate planning show defiance [Chorus] Penalty taxes, they're watching what you do Accumulated earnings, personal holding too Two-fifty, one-fifty, know your credit line Section five-three-one and five-four-one combined [Outro] Remember these sections when you plan ahead Keep money moving or pay the tax instead Five-three-one and five-four-one will always be Watching corporate earnings carefully
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