10. Google Corporation owns 85% of the single class of Yahoo Corporation stock. Yahoo Corporation owns...

10. Google Corporation owns 85% of the single class of Yahoo Corporation stock. Yahoo Corporation owns 35% of Twitter Corporation. Google Corporation also owns 50% of Twitter Corporation, and Twitter Corporation owns 75% of Facebook Corporation.

A) Google, Twitter, Yahoo, and Facebook Corporations are an affiliated group.

B) Google, Twitter, and Facebook Corporations are an affiliated group.

C) Google, Twitter, and Yahoo Corporations are an affiliated group.

D) None of the above are correct.

Expert Solution

ANSWER- (C)

EXPLANATION :

An Affiliated group is two or more corporations which are related through common ownership

but are privileged to file a consolidated tax return.

An Affiliated group consists of a parent corporations and one or more subsidiary corporations.

The Parent corporations must own stock representing at least 80% of the voting power and the

value of the subsidiary.

In the given scenario as Google corporation owns more than 80% (i.e.85%) of the stock of Yahoo corporation thus both Google corporation and Yahoo corporation form an affiliated group .

And both Google corporation and Yahoo corporation are combinedly possess more than 80% of the stock of Twitter corporation (i.e.50%+35% = 85%). So Twitter corporation also form part of the affiliated group.

But the Facebook corporation stands failed to form part of the affiliated group because the parent organisation along with it's subsidiaries i.e. Google along with Yahoo and Twitter are failed to own 80% of the Facebook as they are managed to own only 75% of the stock of the Facebook.

Thus Google,Twitter and Yahoo corporations form an affiliated group

ekkarill92 answered 2 months ago

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