Sole Proprietor, HCEs and Attribution

[imchipbrown]

Mr. Plumber is a Sole Proprietor of a plumbing company which employs his 2 (adult) sons, his brother and his nephew, among other employees. Is there Section 318 attribution from father to sons, making sons HCEs? Any of the other relatives?

[PensionPro]

due to 318 the 2 sons are hces

[imchipbrown]

My confusion is that Section 318 seems to be addressing stock ownership. What is the "stock" of a sole proprietor?

I see reference in Section 416(i) of "Key Employees" -> % owners -> non-corporations, but it seems to be in reference to top-heavy rules.

Maybe I'm using too fine a toothed comb? Or I'm missing the proper reference material...

[PensionPro]

A sole proprietor is the 100% owner of the sole proprietorship. "If the employer is not a corporation, a 5-percent owner is any employee who owns more than 5 percent of the capital or profits interest in the employer." Treas. Reg. §1.414(q)-1T, A-8.

[imchipbrown]

That hit the spot! Thanks PensionPro!