Sections 267 & related entities

[shERPA]

A owns 100% of the stock of corporation Z.   A, B and C are equal 1/3 partners in partnership X.  Under these attribution rules does partnership X indirectly own A'z stock in Z?

267(c)(1) and the regs thereunder  state that stock owned "directly or indirectly" by a partnership is deemed to be owned proportionately by the partners.    267(c)(3) says and individual who is a partner and who owns directly or indirectly through application of (c)(1) stock in a corporation is deemed to own any stock held by his partners.

In Who's the Employer 6th Edition, Q 17:7 Example 17.7.2 describes a case where Mike owns 100% of a corporation, Sam owns 100% of another corporation, Sam and Mike are partners in a separate partnership, so Sam is deemed to own Mike's stock in his corporation.    So in this example Sam has no direct ownership of Mike's stock, so he can't be deemed to own it under (c)(3) unless he is deemed to own it indirectly through the partnership.  But I don't see where 267 says that a partnership is deemed to own the stock owned by its partners.  It appears to be assumed in the example.

Appreciate any insight.

 

 

[Luke Bailey]

Not sure the relevance of 267(c)(1) when no rule in 267 would attribute A's ownership of Z stock to the partnership and 267(c)(3) makes B and C 100% owners of Z stock along with A. Note that for 4975 purposes the (c)(3) attribution among partners is not applied. See. 4975(e)(5)