Sun and Moon Corporations each have only one class of stock outstanding. Their stock ownership is shown below. Which of the four stock ownership changes that are illustrated is the minimum change that is needed if Sun and Moon Corporations are to be brother-sister corporations under the 50%-80% requirements? (Assume the two corporations are equally valued.)

Question

Sun and Moon Corporations each have only one class of stock outstanding. Their stock ownership is shown below.  Which of the four stock ownership changes that are illustrated is the minimum change that is needed if Sun and Moon Corporations are to be brother-sister corporations under the 50%-80% requirements? (Assume the two corporations are equally valued.)

Quizplus · Accepted Answer

In order for Sun and Moon Corporations to be brother-sister corporations, the stock ownership of one corporation needs to be between 50% and 80% of the other corporation. Since Charles currently owns 40% of Moon Corporation and 55% of Sun Corporation, he needs to acquire more of Moon Corporation's stock in order to meet the requirements. The minimum change needed is for Charles to acquire an additional 10% of Moon Corporation, bringing his total ownership to 50%.

Sun and Moon Corporations Each Have Only One Class of Stock