Philip Corporation's management is negotiating with Orlando Corporation's management to purchase some of Orlando's stock. Orlando's outstanding shares are as follows:

Type of Stock		Votes per Share				Shares Outstanding				FMV per Share
Common stock			12				98,000				$20
Preferred stock			3				14,000				110

Orlando's outstanding shares.) Philip's management wants to acquire enough Orlando stock to allow Philip and Orlando to file a consolidated tax return. Philip and Orlando are includible corporations.

REQUIREMENTS:

a) If Philip acquires all of Orlando's common stock and none of Orlando's preferred stock, will they be eligible to file a consolidated tax return?

b) What minimum amount of Orlando's common stock and/or preferred stock must Philip acquire for the two corporations to be eligible to file a consolidated tax return?

c) Suppose that Orlando also has 5,000 shares of nonvoting preferred stock outstanding. Each share's FMV is $130. The stock is nonparticipating, has redemption and liquidation rights limited to its issue price, and is not convertible. If Philip acquires all of Orlando's common and voting preferred stock, what minimum amount of Orlando nonvoting preferred stock must Philip acquire for the two corporations to be eligible to file a consolidated tax return?