Answer:
a. What is John's percentage ownership?
b. What is Brian's percentage ownership?
c. What is Charlie's percentage ownership?
d. If Brian sells property to JBC for a $6,000 loss, what amount of that loss can be recognized for tax purposes (before any annual limitations)?
Step-by-step explanation:
JBC Corporation:
- 20 percent by John
- 30 percent by Brian
- 30 percent by Charlie
- 20 percent by Z Corporation
Z Corporation:
- 80 percent by John
- 20 percent by an unrelated party
Under constructive ownership rules of Section 267, family members included in constructive ownership are siblings, parents, grandparents, and children.
John owns = 20% + (20% x 80% of Z Corporation) = 36%
Brian = 30% + 30% (Charlie) = 60%
Charlie = 30% + 30% (Brian) = 60%