Closed Corporation

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Closed Corporation

A type of business corporation that is owned and operated by a small group of people.

A closed corporation is also known as a close corporation, a family corporation, an incorporated partnership, and a chartered partnership. In this type of corporation all of the functions are usually performed by the same parties. These individuals serve as shareholders, officers, and directors and are involved in the management and operation of the business. A closed corporation differs from a publicly held corporation since its stock is neither issued nor traded to the public at large.

References in periodicals archive ?
This tax structure clearly contrasts with the sale of assets where the seller corporation is taxed on the business sale and the closely-held corporation shareholder is also taxed on the distribution of the business sale proceeds.
Sam has a basis of $1,000,000 in his stock in this closely-held corporation.
The third common alternative transaction structure regarding the sale of a closely-held corporation involves a stock sale that is treated as an asset sale under the Section 338 election.
When a closely-held corporation is sold, the seller will typically want a sale of stock structure, because there will only be one level of income tax to pay on the sale transaction.