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Question 138: John, Mary (his wife) and John's parents all are employees of ABC company. The only one who owns stock in the company is John, who owns exactly 10%. Obviously, John is an HCE of ABC because he owns more than 5% of the company and he is an employee. I am uncertain whether Mary or John's parents are HCEs, however. Although the stock certificate is issued to John, I am not sure whether the stock is separate property or community property. |
Answer: Well, you had better become sure because a lot rests on that issue. Let's run through basic principles: |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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