Pierre Corporation€™s management is negotiating with Salem Corporation€™s management to purchase some of Salem€™s stock. Salem€™s outstanding shares are as follows:

Pierre€™s management wants to acquire enough Salem stock to allow Pierre and Salem to file a consolidated tax return. Pierre and Salem are includible corporations.
a. If Pierre acquires all of Salem€™s common stock and none of Salem€™s preferred stock, will they be eligible to file a consolidated tax return?
b. What minimum amount of Salem€™s common stock and/or preferred stock must Pierre acquire for the two corporations to be eligible to file a consolidated tax return?
c. Suppose that Salem also has 10,000 shares of nonvoting preferred stock outstanding. Each share€™s FMV is $90. The stock is nonparticipating, has redemption and liquidation rights limited to its issue price, and is not convertible. If Pierre acquires all of Salem€™s common and voting preferred stock, what minimum amount of Salem nonvoting preferred stock must Pierre acquire for the two corporations to be eligible to file a consolidated tax return?

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Type of Stock Votes per Shan Shares Outstanding FMV per Share Common stock 60,000 $40 Preferred stock 1 10,000 75