Question

Plane Corporation has 1,200 shares of stock outstanding. Clark owns 300 shares, Clark's father owns 200 shares, Clark's daughter owns 100 shares, and Clark's aunt owns 200 shares. Balloon Corporation owns the other 400 shares in Plane Corporation. Clark owns 25% of the stock in Balloon Corporation. Applying the § 318 stock attribution rules, how many shares does Clark own in Plane Corporation?______

Hawk Corporation (E & P of $700,000) has 3,000 shares of common stock outstanding. Federico owns 1,500 shares and his wife, Catherine, owns 1,500 shares. Federico and Catherine each have a basis of $90,000 in their Hawk stock. In the current year, Hawk Corporation redeems 1,000 shares from Federico for $300,000. Assuming sufficient E&P, with respect to the distribution in redemption of the Hawk stock Federico has dividend income of:_______

Celeste, Scarlett, and Hank, unrelated individuals, own all of the stock in Wheel Corporation (E & P of $1.2 million) as follows: Celeste, 1,500 shares; Scarlett, 300 shares; and Hank, 200 shares. Wheel redeems 900 of Celeste's shares (basis of $210,000) for $800,000. With respect to the distribution in redemption of the stock, Celeste has dividend income of:______

Answer 1

1)An individual is consider as owing the stock owned, directly or indirectly by/for (i) Spouse (ii) his children, grandchildren and parents

As far as corporation is concern if 50% or more is held buy any person then shares held by company shall be deemed to be owned by that person in sam proportion as his hlolding

Thus

Total holding of clark = 300+200+100 = 600 shares

2) Ratio is 1:1

Dividend amount of Hawk corporation= 300000*1/2 = 150000

3) Ratio is 15:3:2 for celeste,scarlett and hank

Celeste' dividend income = (800000-210000)*15/20

=442500