Appendix
Attribution Table
The following is a table which compares the attribution rules of Chapters 7, 14, and 17. These tables are only intended as a summary and a quick reference point. Be sure to use them with the appropriate material from the book.
A quick glance at the tables reveals that there is only one form of attribution which is treated exactly the same by all three systems. Under IRC §1563, and IRC §318, and IRC §267 there is always attribution between a parent and a child under age 21. With that one exception, each attribution system has its own peculiarities for each item on the list. Each of the three attribution systems prohibits double attribution via any of the family rules. Generally, however, double attribution is permitted under the other rules, with exceptions peculiar to each system.
One of the most frequent errors practitioners make is applying the wrong attribution system to a particular situation. These tables make it clear that you must first determine which attribution system applies. Only then can you be sure you are applying the proper set of rules.
|
Attribution Type |
Controlled Group Rules (IRC § §1563) |
ASG/HCE Rules (IRC §318) |
Related Party Rules (IRC §267) |
|
Spouse |
Deemed to own stock unless divorced (including interlocutory) or separated or noninvolvement exception applies |
Deemed to own stock unless divorced (final decree only) or separated; no noninvolvement exception |
Deemed to own stock unless there is a final decree of divorced; no noninvolvement exceptions |
|
Parent to child < 21 |
Deemed to own stock |
Deemed to own stock |
Deemed to own stock |
|
Parent to child > 20 |
Deemed to own stock only if child owns more than 50% |
Deemed to own stock |
Deemed to own stock |
|
Child to parent |
Mirrors the two parent to child rules |
Deemed to own stock |
Deemed to own stock |
|
Grandparent to grandchild |
Same as parent to child > 20 |
No attribution |
Deemed to own stock |
|
Grandchild to grandparent |
Same as parent to child > 20 |
Deemed to own stock |
Deemed to own stock |
|
Other lineal ancestors & descendants |
No attribution |
No attribution |
Deemed to own stock |
|
Brothers, sisters, half-siblings |
No attribution |
No attribution |
Deemed to own stock except for IRC §4975 |
|
Spouses of lineal descendants |
No attribution |
No attribution |
Deemed to own stock for IRC §4975 |
|
Partnership to partner |
5% parents deemed to own pro rata interest in stock |
Deemed to own pro rata interest in stock |
Deemed to own pro rata interest in stock |
|
Partner to partner |
No attribution |
No attribution |
Deemed to own stock |
|
S Corporation to shareholder |
5% shareholder deemed to own pro rata interest in stock |
Deemed to own pro rata interest in stock |
Deemed to own pro rata interest in stock |
|
C Corporation to shareholder |
5% shareholder deemed to own pro rata interest in stock |
50% shareholder deemed to own pro rata interest in stock. Reduces to 5% for HCE and key employee |
Deemed to own pro rata interest in stock |
|
Estate or trust to beneficiary |
5% or more beneficiary deemed to own pro rata interest in stock. Grantor of grantor trust deemed to own stock. |
All beneficiaries deemed to own pro rata interest in stock. Grantor of grantor trust deemed to own stock |
All beneficiaries deemed to own pro rata interest in stock. |
|
Retirement trust to participant or beneficiary |
5% or more beneficiary deemed to own pro rata interest in stock for retirement plan purposes. No attribution for income tax purposes. |
No attribution |
All beneficiaries deemed to own pro rata interest in stock. |
|
Attribution to entities |
No attribution |
All stock attributed, but see Q 14:14 |
No attribution |
|
Holders of options |
Deemed to own stock |
Deemed to own stock |
No attribution |
|
Used for |
Controlled groups |
Traditional ASGs HCEs Key Employees 401(a)(9) ESOPS Shareholder Employees |
Management Function Groups Leased Employees Prohibited Transactions |