Diego owns 30 percent of Azul Corporation. Azul Corporation owns 50 percent of Verde Corporation. Under the attribution rules applying to stock redemptions, Diego is treated as owning 15 percent of Verde Corporation.
The corporation to shareholder attribution rule only applies if Diego owns 50 percent or more of Azul Corporation.

Question

Quizplus · Accepted Answer

The corporation to shareholder attribution rule applies when the shareholder owns more than 50 percent of the corporation, which is not the case for Diego who owns only 30 percent of Azul Corporation. Therefore, he is not subject to the attribution rules when it comes to owning Verde Corporation through his ownership in Azul Corporation.

Diego Owns 30 Percent of Azul Corporation