Question

LO 6.3 BJT Corporation is owned 40 percent by Bill, 30 percent by Jack, and 30 percent by the Trumpet Partnership. Bill and Jack are father and son. Jack has a 10 percent interest in Trumpet Partnership. What is Jack’s total direct and constructive ownership of BJT Corporation under Section 267?

Answer 1

Jack's total direct and constructive ownership of BJT Corporation under Section 267 is 33%.

How is that so?

Jack's Direct Ownership:

Jack directly owns 30% of BJT Corporation.

Jack's Constructive Ownership:

Trumpet Partnership's Ownership: 30%

Jack's Ownership in Trumpet Partnership: 10%

Constructive Ownership: 10% * 30% = 3%

Jack's Total Ownership:

Direct Ownership + Constructive Ownership = Total Ownership

30% + 3% = 33%

Therefore, Jack's total direct and constructive ownership of BJT Corporation under Section 267 is 33%.

Answer 2

Jack’s total direct and constructive ownership of BJT Corporation under Section 267 is 33%.

Step-by-step explanation:

From the question, we have the following:

Jack's ownership of BJT Corporation = 30%

Jack's interest in Trumpet Partnership = 10%

Jack's share of 30 percent owned by Trumpet Partnership in BJT Corporation = Jack's interest in Trumpet Partnership * 30 percent owned by Trumpet Partnership in BJT Corporation = 10% * 30% = 3%

Therefore, we have:

Jack’s total direct and constructive ownership of BJT = Jack's ownership of BJT Corporation + Jack's share of 30 percent owned by Trumpet Partnership in BJT Corporation = 30% + 3% = 33%

Therefore, Jack’s total direct and constructive ownership of BJT Corporation under Section 267 is 33%.