financial account The ownership ratio has been altered to Simon holding 20 percentand Herb III 15 percent of shares in Owner. All shares of the Ownerbear equal voting rights. The rest of shareholding is dispersed andheld by multiple shareholders, none individually owning more than5 percent of equity. Simon has a contractual right to appoint 2 outof 5 members of the Board of Directors of Owner and the Boardapproves the strategic operational and financial decisions of thecompany. Discuss the nature of the relations of Simon and Herb IIIwith Owner.

Sort Answer Simon holds 20% shares, meaning he holds ownership rights of 20%. Secondly, no one else…

Answered: The ownership ratio has been altered to…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 54P

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general account
A VIE has three equity holders, Equity Holder 1 owns 20% of the C/S. Equity holder 2 owns 30% of the C/S and equity holder 3 owns 50% of the C/S. Each of the equity holders has 2 votes on a 6-person board. The board makes all decisions affecting the VIE’s policies and practices. Determine which party, if any, is the primary beneficiary and explain briefly why.
P Ltd owns 45% of the shares of S Ltd. P Ltd can appoint or remove four of the six directors on the board of S Ltd. Each director is entitled to one vote at the directors’ meeting. The decisions made at the directors’ meetings direct the relevant activities of S Ltd. Identify the correct options that reflect the control that P Ltd has in S Ltd. (i) P Ltd currently holds the majority of the voting rights (4/6 =66,6%) at the directors’ meeting.(ii)The voting rights that P ltd has give the current ability to use its majority vote at the directors’ meeting to direct the relevant activities of S Ltd.(iii) P Ltd is exposed to variable returns from S Ltd through dividends and the value of its investment in S Ltd. (iv) P Ltd has the ability to use its majority voting rights (power) at the directors’ meeting to affect its returns (through dividend policies, operating decisions, etc.). (v)P Ltd has no control over S Ltd because of the 45% shareholding. Select one: a. (i),(iii),(v) b.…
4) The articles of Spades Ltd. Provide, inter alia: i) Any shareholder appointed to the position of managing director shall hold the position for life. ii) Any shareholder who at any time wishes to transfer any or all of his shares shall first offer them to existing shareholders of the company who shall be obliged to purchase such shares at the original purchase price” In September, Karen, a shareholder, was appointed managing director of Spades Limited The Board of Directors has decided to dismiss Karen immediately because of her poor performance on the job to date. Joseph, a shareholder, wishes to sell his shares and has received an offer from Peter, who is not a shareholder, to buy shares well above the original price. Melissa, an existing shareholder, is adamant that she should be allowed to purchase Joseph’s shares at the original price. Joseph is the only shareholder who currently holds less than 5% of the shares of Spades Limited Question: Advise Karen and Melissa.
‘An associate is an entity over which the investor has significant influence’ (para 3). Which of the following indicate the presence of significant influence? A. The investor controls the votes of a majority of the board members B. The investor is able to insist that all of the sales of the investee are made to a subsidiary of the investor C. The investor owns 330,000 of the 1,500,000 equity voting shares of the investee
P Ltd owns 55% of the shares of S Ltd. Each share entitles the holder to one vote at the AGM.The decisions made at the AGM direct the relevant activities of S Ltd.Identify the correct statement(s) regarding control.(i) P Ltd holds the majority of the voting rights at the AGM.(ii) P ltd has the ability to use its majority voting rights at the AGM to affect its returns.(iii) P Ltd is not exposed to variable returns from S Ltd through dividends and the value of investment in S Ltd.(iv) P Ltd has control over S Ltd and S Ltd is a subsidiary of P Ltd.Select one:a.(i), (ii) and (iii)b.(i) and (iv)c.(i), (iii) and (iv)d.(i), (ii) and (iv)
Which of the following statements about business entity income is TRUE? Blair is a shareholder in a C corporation. She owns 55% of the shares and performs services for the company. Her wages will be reported on Form W-2, and her share of the company's ordinary income will be reported to her on Schedule K-1 (Form 1120). Estrada is a limited partner who materially participates in the partnership and receives guaranteed payments. The partnership will report her guaranteed payments on Schedule K-1 (Form 1065). Estrada's guaranteed payments will be subject to self-employment tax. O Laura is a shareholder in an S corporation. She owns 15% of the shares and does not perform services for the company. The company will report her share of income on Schedule K-1 (Form 1120-S). Laura will pay self-employment tax on her share of the ordinary income. O Tanita is a sole proprietor. She may report her business income on Schedule C (Form 1040) or Form 1065. Mark for follow up
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Susan Casulla, Margie Landicho and Christine Supapo decided to incorporate their business and invited Irene Beltran and Eleanor Eno to join with them. The partnership shall transfer all assets and liabilities to the corporation. Irene Beltran and Eleanor Eno will purchase 250 each of the corporation’s ordinary share. The corporation is authorized to issue 5,000 shares at P50.00 par value per share. The post-closing trial balance after adjustments in preparation for incorporation follows: Yummy Cakes and Pastries Post-closing Trial Balance September 30, 20A Debit Credit Cash 40,000 Merchandise Inventory 70,000 Furniture and Equipment 100,000 Accumulated Depreciation 20,000 Accounts Payable…
Determine the basis of stock in the hands of the shareholder, the basis to the corporation of the contributed property, and the gain, if any, to the shareholder in each of the follow independent cases. In all cases, assume that the 80% test is met. a. Pierre contributes a vehicle with a FMV of $ 6,000.00 and basis of $ 8,000.00. b. Marcus contributes land with a FMV of $ 500,000.00, basis of $ 300,000.00, and debt of $ 250,000.00. c. Same as b. Except Marcus also receives cash of $ 25,000.00. d. Patricia contributes an apartment building with a FMV of $ 200,000, basis of $ 50,000.00, and debt of $ 125,000.00
Entity A owns 25% of the voting rights in Entity B. However, Entity A has no representation on the board of directors of Entity B. Which of the following statements is correct? * Entity A cannot be presumed to have significant influence over Entity B because Entity A does not have board representation. Entity A is presumed to have signification influence over Entity B because it holds 25% or more of the voting rights in Entity B. Entity A is presumed to have signification influence over Entity B because it holds 20% or more of the voting rights in Entity B. Representation on an investee's board of directors is never considered when determining the existence of significant influence.
Pennypincher Corporation has 1,500 shares of stock outstanding owned by the following taxpayers Shareholder Shares Owned 500 240 180 Mr. Penny Mrs. Penny (Mr. Penny's wife) John (they Penny's son) Buddy Penny (Mr. Penny's brother) 200 P & P Partnership (Mr. Penny is a 20% partner) PPP Corporation (Mr. Penny is a 30% shareholder) a) Determine Mr Penny's stocks owned for purposes of the Internal Revenue Code Section 302(b)(2)) redemption provision? b) Determine the stocks owned by the PPP Corporation for purposes of the Internal Revenue Code Section 302(b)(2) provision? c) Under what conditions can Mrs Penny get redemption treatment under Internal Revenue Code Šection 302(b)(3) for the redemption of the 10 share actually owned? 100 280

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