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 ?
decisions in closely held corporations call for more judicial scrutiny
11) While there is no standard set of attributes, certain characteristics distinguish closely held corporations from their publicly traded counterparts.
For the purposes of determining material participation, individuals, estates and trusts are treated differently from closely held corporations and personal service corporations.
Fortunately, many states have enacted laws that relax nonessential governance requirements for closely held corporations.
The IRS has typically applied this asset approach when a closely held corporation functions as a holding company and earnings are relatively low in comparison to the fair market value of the underlying assets.
In third-party transfers involving closely held corporations, the scenario changes.
The first step in the process of valuing a stock interest in a closely held corporation is valuing the entire business.
Establishing a reasonable compensation level is a not a science, especially when it includes a contingent compensation arrangement in a closely held corporation.
These increasingly popular restrictive agreements can be valuable tools to closely held corporations that seek to protect shareholder ownership interests and increase the probability of achieving a long and successful operating life.
As a practical matter, the tax is imposed almost exclusively on closely held corporations.
This question normally arises when dealing with closely held corporations that have few, if any, employees other than those receiving the distributions.
Further, transactions involving closely held corporations and their controlling shareholders demand close scrutiny.