All of the stock of Hot Dog, Inc., a fast-food franchise operating in nine southeastern states, is owned by Winsome America, Inc., a § 501(c)(3) organization. The stock was received last year as an inheritance from Rob, the entrepreneur who founded the chain.
During the current year, Hot Dog reports profits before taxes and taxable income of $8 million. Hot Dog distributes
$5 million to its parent, and it retains the balance for expansion purposes.
a. What are the tax consequences to Hot Dog and to Winsome America?

b. How would your answer ina. change if Hot Dog distributes $8 million to Winsome, rather than $5 million?

Question

All of the stock of Hot Dog, Inc., a fast-food franchise operating in nine southeastern states, is owned by Winsome America, Inc., a § 501(c)(3) organization. The stock was received last year as an inheritance from Rob, the entrepreneur who founded the chain.
During the current year, Hot Dog reports profits before taxes and taxable income of $8 million. Hot Dog distributes
$5 million to its parent, and it retains the balance for expansion purposes.
a. What are the tax consequences to Hot Dog and to Winsome America?

b. How would your answer ina. change if Hot Dog distributes $8 million to Winsome, rather than $5 million?

Quizplus · Accepted Answer

The Answer of All of the stock of Hot Dog, Inc., a fast-food franchise operating in nine southeastern states, is owned by Winsome America, Inc., a § 501(c)(3) organization. The stock was received last year as an inheritance from Rob, the entrepreneur who founded the chain.
During the current year, Hot Dog reports profits before taxes and taxable income of $8 million. Hot Dog distributes
$5 million to its parent, and it retains the balance for expansion purposes.
a. What are the tax consequences to Hot Dog and to Winsome America?

b. How would your answer ina. change if Hot Dog distributes $8 million to Winsome, rather than $5 million?

All of the Stock of Hot Dog, Inc