Question

Derk owns 250 shares of stock in Rose Corporation. The remaining 750 shares of Rose are owned as follows: 150 by Derk's daughter, 200 by Derk's aunt, and 400 by a partnership in which Derk has an 80% interest. Determine the number of shares Derk owns (directly and indirectly) in Rose Corporation

Answer 1

570 shares

Step-by-step explanation:

The amount of stocks that Derek owns are:

• directly: 250 shares
• indirectly: 400 stocks x 80% = 320 (indirect ownership happens when an investor owns a company that owns stock in another company).

In total Derk owns 570 shares.

If Rose Corporation is a S corporation, then Derk and all his family would be considered one single shareholder, but that doesn't mean that the daughter's and aunt's stocks belong to Derk, it simply means that for legal purposes they count as one shareholder because they are family members.

Answer 2

570 shares

Step-by-step explanation:

Derk Owns their 250 shares direcrly

and80% of the partnership shares indirectly:

400 x 80% = 320 shares

total shares in Rose Corporation: 570

While his daughter and aunt are close family they decide over when to sale this share and the dividend received from Rose are part of their income for tax purpose not Derk.