Option #2: Cost Recovery Dan owns 50 of 100 shares of stock in ABC corporation....
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Finance
Option #2: Cost Recovery
Dan owns 50 of 100 shares of stock in ABC corporation. ABC owns 100% of DEF Inc. DEF owns 40 of 100 shares of GHI Corporation. Dan owns 60 shares of GHI. What is the tax effect if GHI redeems the 60 shares of GHI that Dan owns for $200 (assume Dan is in a 39% tax bracket)? How would your answer change if Dan owned no shares in ABC, but his son owns 50 shares of ABC.
Clearly identify the requirements being addressed. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that the thought process can be examined. Make effective use of comments to convey your thought process as well. No hard coding of solutions. Submit a single MS Excel file for grading.
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