Which of the following groups constitute a controlled group? (Any stock not list

Question

Which of the following groups constitute a controlled group? (Any stock not listed below is held by unrelated individuals each owning less than 1% of the outstanding stock.) For brother-sister corporations, which definition applies?

B. Johnson and Carey Corporations each have only a single class of stock outstanding. The two controlling individual shareholders own the stock as follows:

Does this meet the 50-80% rule and also 50% only rule?

Stock Ownership Percentages

Shareholder

Johnson Corp.

Carey Corp

David

60%

80%

Kelly

30%

0%

Stock Ownership Percentages

Shareholder

Johnson Corp.

Carey Corp

David

60%

80%

Kelly

30%

0%

Explanation / Answer

When two or more parties are controlling an organisation jointly, they are either in a form of joint parties or controlled group.

Thus, Johnson Corporation is as controlled group.

But in the Carely corp. only David is controlling the corporation individually and not jointly, so he is controlling the organisation individually and as a joint controlled entity. Hence, it is not a controlled group.

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