Question

DLA Corporation has 1,000 shares of common stock outstanding. Mark owns 200 shares, Mark's mother owns 200 shares, Mark's daughter owns 100 shares, and Mark's sister owns 150 shares. The remaining shares outstanding are owned by HNK Corporation (150 shares) and TMS Partnership (200 shares). Mark owns 60% of the stock in HNK Corporation.

1. Applying the stock attribution rules applicable in the case of a stock redemption, how many shares does Mark own in DLA Corporation?
2. Assume Mark owns only 35% of HNK Corporation. How many shares does Mark own, directly or indirectly, in DLA Corporation?
3. Assume Mark owns 50% of TMS Partnership. How many shares does Mark own in DLA Corporation, assuming the same facts as in (1), above, augmented by TMS's ownership of DLA shares?

Answer 1

Ans:

As per Stock Attribution rules, Shares owned by Mark in DLA Corporation:

Mark Shares: 200

Mark's Mother: 200

Mark's Daughter: 100

mark's sister shares will not be considered as hold by family member.

In case of 50% or more in the value of stock of corporation is owned, directly or indirecly. Proportionate owing of stock is considered

Owned through HNK Corporation.: 60% of 150 = 90

Total Owned : 590 Shares

2.

In case less than 50% in the value of stock of corporation is owned a stock is not considered as owned directly or indirectly by stock owner.

Total stock owned in such case: 500 shares.

3.

In case mark owns 50% of TMS partnership:

Stock owned directly or indirectly by or for a partnership shall be considered owned proportinate by the partner.

Owned through TMS Partnership.: 50% of 200 = 100

Total Stock Owned : 590+100 = 690 shares.