Family Attribution

[Guest RS182]

Just to reinforce myself, someone has left me with doubt in my mind.

Owner A - 4.25% ownership (father of Owner B)

Owner B - .82% ownership (Daughter of Owner A)

the remaining ownership is divided among other non-family members. By definition aren't Owner A and B Key and HCE; due to greater than 5 % ownership.

Sorry long disscussion with someone has me doubting myself.

[Guest Sieve]

For HCE and TH purposes, an individual is treated as owning any stock owned by that individual's spouse, children, grandchildren & parents (which is easier family attribution than for determining a controlled group). So, in your situation, both A & B are HCEs & key employees.

The confusion may be that the family attribution rules for controlled group purposes are different. In your situation, for example, A & B would not be treated as owning each other's stock for controlled group purposes if B is an adult child.