Family Attribution rules for Trust Beneficiary

[NW529]

We have a company that is owned by several trusts at 20% ownership each. Each individual is the primary beneficiary of their respective trust, so they are considered 20% owners of the company. 

However, are the children of the beneficiary of the trust also attributed 20% ownership of the company? 

This scenario has come up due to key employee determination for Top Heavy. 

My initial instinct says yes, but I would appreciate any feedback and/or reg citations. 

Thank you! 

[Luke Bailey]

NW529, you summarize the facts only very briefly and may not have included all relevant, but generally, at least, your initial instinct seems correct. See IRC secs. 416(i)(1)(B) and 318(a)(1)(A)(ii) and related regulations.