Sun and Moon Corporations Each Have Only One Class of Stock

question 23

Multiple Choice

Sun and Moon Corporations each have only one class of stock outstanding. Their stock ownership is shown below. $$\begin{array} { | c | c | c | } \hline \text { Shareholder } & \text { Sun Corporation } & \text { Moon Corporation } \\\hline \text { Arthur } & 50 \% & 60 \% \\\text { Brenda } & 20 \% & 40 \% \\\text { Charles } & 30 \% & 0 \% \\\text { David } & 0 \% & 0 \% \\\hline\end{array}$$ Which of the four stock ownership changes that are illustrated is the minimum change that is needed if Sun and Moon Corporations are to be brother-sister corporations under the 50% requirements? (Assume the two corporations are equally valued.)

• A) No stock ownership change is required.
• B) Arthur sells 4/5ths of his shares in Sun to David.
• C) Arthur sells his 2/3rds of his shares to David.
• D) Arthur must acquire an additional 30% of Moon Corporation.

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