M owns 60 percent of B Corporation and 40 percent of C Corporation.C Corporation owns 20 percent of B Corporation.Under the constructive ownership rules of § 318, C Corporation is treated as owning 80 percent of B.

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Under § 318 constructive ownership rules, C Corporation's direct ownership in B Corporation (20%) is combined with M's indirect ownership through C Corporation (40% of C's 20% in B), which does not result in an 80% ownership but rather a 28% ownership in B Corporation by C Corporation.

M Owns 60 Percent of B Corporation and 40 Percent