Dan owns 50 of 100 shares of stock in ABC corporation. ABC owns 100% of DEF Inc. DEF owns 40 of 100 shares of GHI Corporation. Dan owns 60 shares of GHI. What is the tax effect if GHI redeems the 60 shares of GHI that Dan owns for $200 (assume Dan is in a 39% tax bracket)? How would your answer change if Dan owned no shares in ABC, but his son owns 50 shares of ABC.

Answer rating: 100% (QA)

Solution Dan owns 50 shares of ABC ABC owns 100 of DEF DEF owns 40 of GHI ie 100 of DEF ie 50 of AB... View the full answer