Z is a corporation owned by an individual, C and a corporation , D. C owns 60 sh

Question

Z is a corporation owned by an individual, C and a corporation , D. C owns 60 shares of Z common stock, D owns 40 shares of Z common stock. C wishes to sell 30 shares back to Z for $600. C owns 45% of the stock of D corporation and E, C[s father, owns 5% of the outstanding shares of D.

a There is no attribution under Section 318 of D's ownership in Z because C owns only 45%

b There is attibution of 50% of D's ownersip in Z

c There is attribution of all of C's shares in Z to D

d B and C

e None of the above

Wich is the correct answer? Can you explain why

Explanation / Answer

a There is no attribution under Section 318 of D's ownership in Z because C owns only 45%

Requirements to qualify: 1) Own less than 50% of the total combined voting power of the voting stock. §302(b)(2)(B).

2) Percentage of voting stock owned after the redemption is less than 80% of the total voting % owned before the redemption. §302(b)(2)(C).

3) Percentage of ownership of all common stock is less than 80 percent of the prior % of the total common stock owned. §302(b)(2)(C).

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