Show your calculations, reference all relevant citations, and explain your answer. Use a flat corporate tax rate of 21% for all problems. Assume a tax rate of 15% for all dividends and capital gains. Assume there is no Alternative Minimum Tax for these problems. Assume that all entities are US domestic corporations, taxed under Subchapter C of the IRC unless otherwise noted.

Problem 5.1 Constructive Ownership A. Candy Corporation has 100 shares issued and outstanding. The shares are owned as follows:

Cindy 20 shares

Cindys mother 20 shares

Cindys maternal grandmother 5 shares

Chocolate Corporation 50 shares Chocolate Corporation is owned 60% by Cindy, and 40% by unrelated parties.

Required:

a) How much stock in Candy Corporation is Cindy considered to own under IRC 318? b) How much stock in Candy Corporation is Cindys mother considered to own under IRC 318?

B) Corn Corporation has 100 shares issued and outstanding. The shares are owned as follows:

• Corporation Hallo 20 shares
• Corporation Ween 50 shares
• Pumpkin Partnership 30 shares

Paddy owns the following percentages of these entities:

• Corporation Hallo 60%
• Corporation Ween 40%
• Pumpkin Partnership 20%

1. How much stock in Corn Corporation is Paddy considered to own under IRC 318?
2. How much stock in Corn Corporation would Paddys wife be considered to own under IRC 318?
3. How much stock in Corn Corporation would Paddys wifes mother be considered to own under IRC 318?

C. Can the family attribution rules be waived if family members are feuding and do not talk to each other?