Answered

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Jack owns 100 shares of X corporation stock. His wife Jill also owns 100 shares X corporation stock. Jack is 60% owner of Z corporation (a C corporation). Z corporation is owns 120 shares under section 318 because of attribution.
a) True
b) False

Sagot :

Answer:

a) true

Explanation:

The correct answer is a) True.

Under Section 318 of the US tax code, attribution rules apply to attribute shares owned by related parties to a common owner. Since Jack and Jill are spouses, they are considered related parties.

Jack owns 100 shares directly and is deemed to own an additional 120 shares through his 60% ownership of Z Corporation, making his total attributed shares 220 (100 + 120).

Similarly, Jill's ownership is also attributed to Jack as her spouse, adding her 100 shares to Jack's total attributed shares, making it 320 (220 + 100).

So, Jack is considered to own 320 shares (100 direct + 220 attributed) of X Corporation stock for tax purposes.

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