Guest yukon Posted July 29, 2005 Posted July 29, 2005 Husband owns 100% of small business. Wife is Husband's sole beneficiary. Husband has daughter (now over 18) from previous marriage. Wife has never legally adopted Husband's daughter. Husband dies in car wreck. Subsequently, Wife is now 100% owner of small business. Husband's daughter works at small business. Q: Is Husband's daughter Key, HCE, etc?
JanetM Posted July 29, 2005 Posted July 29, 2005 My vote would be no. Wife is now 100% owner and she has no legal relationship to the +18 year old girl. JanetM CPA, MBA
stephen Posted July 29, 2005 Posted July 29, 2005 The timing of the death could impact this scenario. For example, if it is a calendar year plan and the husband died in 2004 the daughter would still be a 5% owner in 2005.
R. Butler Posted July 29, 2005 Posted July 29, 2005 I agree with Stephen. See IRC §318; you need look at both the current year & lookback year.
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