Stock attribution rules in the case of stock redemption


Brown Corporation has 1,000 share of common stock outstanding. Bob owns 200 of the shares, Bob's mother owns 200 shares, Bob's daughter owns 100 shares, and Bob's sister owns 150 shares. The remaining share outstanding are owned by Black Corporation (150 shares) and Bluebird Partnership (200 shares). Bob owns 60% of the stock in Black corporation.

a. Applying the stock attribution rules applicable in the case of a stock redemption, how many shares does Bob own in Brown Corporation?

b. Assume Bob owns only 35% of Black Corporation. How many shares does Bob own, directly or indirectly, in Brown Corporation?

c. Assume Bob owns 50% of Bluebird Partnership. How many shares does Bob own in Brown Corporation assuming the same facts as in a., above, augmented by Bluebird's ownership of Brown shares?

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Accounting Basics: Stock attribution rules in the case of stock redemption
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