Brenda Wren Posted February 21, 2007 Posted February 21, 2007 Two employees own 50% each of the company. One of them dies on 12/1/05. His stock is immediately purchased by the other owner. So the surviving partner owns 100% of the stock on 12/31/05. The deceased partner's son is employed by the company. Is the son an HCE in 2006?
Belgarath Posted February 21, 2007 Posted February 21, 2007 Yes. The ownership test is at any time during either the determination (current) year, or the lookback (prior) year. See IRC 414(q)(1)(A).
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