Lansing Company is owned equally by Jennifer, her husband, Dan, and DeWitt Corporation, which is owned 50 percent by Jennifer and her sister Jane. Each of the three shareholders holds 100 shares in the company. Under the §318 stock attribution rules, how many shares of Lansing stock is Jennifer deemed to own?
A)100.
B)200.
C)250.
D)300.

Question

Quizplus · Accepted Answer

According to the §318 stock attribution rules:

- An individual is deemed to own the shares owned by his or her spouse.
- A corporation is deemed to own the shares owned by its 50 percent or more shareholder(s).

Using these rules, Jennifer is deemed to own:

- Her own shares: 100
- Her husband's shares: 100
- DeWitt Corporation's shares (50% owned by Jennifer and her sister): 50% of 300 (total number of shares) = 150
- Total: 100 + 100 + 150 = 350

However, since Jennifer actually owns only 100 shares in the company, we take the lesser of the actual ownership and the deemed ownership, which is 250 (Option C).

Lansing Company Is Owned Equally by Jennifer, Her Husband, Dan