family attribution example

[k man]

what is the rule for family attribution pertaining to son in law or daughter in laws over 20. is it that if the parent owns more than 50% of the voting stock, then they own the son in law or daughter in laws stock by attribution?

[Guest]

IRC 318 states

'an individual is treated as owning any interest that is owned by the individual's spouse, children, grandchildren, or parents'

age is irrelevant

No mention is made of in-laws.

and

318(a)(5)(B) says that no double attribution is made.

If the child owned the stock, then his/her spouse would own as well as the parent.

but if parent owns the stock, then only the child owns and not the spouse of the child.

[R. Butler]

§318 is the place to look for determining attribution for top heavy and ADP/ACP testing, however, for controlled group purposes you use §1563. Under §1563 the "50% stuff" does come to play, however, there is never attribution to or from an "in-law" and you don't attribute the same stock twice (i.e., wife to husband to husband's father).

[k man]

Does family attribution come into play for party in interest transactions?

[KJohnson]

For determining parties in interest for prohibited transactions, I think there might be attribution of "spouses of lineal descendants" Look at Code Section 4975(d)(2), (4), and (6).

[R. Butler]

Its not attribution per se, but the spouse of a lineal descendant is a party in interest. (Erisa §§ 3(14), 3(15)). Also, brothers, sisters and their spouses would be considered parties in interest.

[Lynn Campbell]

R. Butler - Could you please explain how a brother or sister-in-law of the participant is a party in interest?

[k man]

i think R.Butler was referring to the brother or sister of the party in interest, not the participant. p.s. thank you r.butler and k.johnson. those code sections were right on point for what i was looking for.