IRC 318 stock attribution in year of divorce...

[jaemmons]

If a 100% owner and his spouse (who is an employee of the corp.) are divorced during the current year, is the spouse considered an hce for the current year? I would think so, because even though the stock attribution rule no longer apply after the divorce, they did apply before the divorce.

When does stock attribution no longer apply after a decree of divorce?

[Blinky the 3-eyed Fish]

Once they are divorced, the attribution no longer applies. But for HCE status you are looking to whether they were an owner in the current or past year. Thus if the divorce was not final before that period, the ex-wife is still an HCE.