Attribution and HCE's

[Guest carsonv]

Hopefully someone can help me with this. Mr. P ownes 100% of P&P. His wife Mrs. P is an EE of P&P. Mr. P's step-son (Mr. C the son of Mrs. P from previous marriage) is also an EE. Would Mr. P, Mrs. P, and Mr. C all be HCE's?

Is there any double attribution here?

Any help would be appreciated.

Carson

[Blinky the 3-eyed Fish]

Ownership would not be attributed to the step-son unless he was adopted by Mr. P because of the double attribution rules.

[Mike Preston]

Is there doubt to that conclusion in a community property state?

[Blinky the 3-eyed Fish]

Yes. My first answer was incomplete.

Carsonv, in what state are your clients?

[Guest carsonv]

They are in South Carolina...thanks again for the help

[Guest carsonv]

I am not familiar with a community property state....any explination is welcomed.

[Harwood]

Here is an IRS Publication on Community Property:

http://www.irs.ustreas.gov/pub/irs-pdf/p555.pdf

[Mike Preston]

So, Blinky's answer may have been incomplete, but it was correct nonetheless.

In a community property state I believe the conclusion would be that Mr. C is an HCE because the spouse is deemed to directly own her community property interest. Hence, the attribution to Mr. C would be "single" attribution, as opposed to double attribution.