Mr.S owns 40 percent of R Corporation and 60 percent of T Corporation.T owns 30 percent of R.Under the constructive ownership rules of § 318, Mr.S is treated as owning 58 percent of R.

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According to the constructive ownership rules of § 318, an individual is treated as owning stock that is owned by their spouse, children, grandchildren, and certain other related parties. In this scenario, Mr.S owns 40 percent of R Corporation and T Corporation owns 30 percent of R Corporation. Therefore, under § 318, Mr.S is treated as owning the 30 percent of R Corporation owned by T Corporation, bringing his total ownership of R Corporation to 70 percent (40 percent + 30 percent).

MrS Owns 40 Percent of R Corporation and 60 Percent