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DC Plan Administrator
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![]() Aprio (Alpharetta GA / AL / NC / Telecommute) |
Defined Benefit Plan Administrator
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Question 54: I'm confused as to whether or not the mother-in-law of the owner of an S-corp is considered to be a key employee or a highly compensated employee by virtue of (double) family attribution. She is on the payroll and active in the business. She also earns considerably less than $80,000. |
Answer: Although it doesn't fit directly in our focus on employee and employer aggregation, this question does rely on the attribution rules of Code section 318, the rules that govern affiliated service groups. For example, IRC 318(a)(5)(B) says "Stock constructively owned by an individual by reason of the application of paragraph (1) [the family attribution rules] shall not be considered as owned by him for purposes of again applying paragraph (1) in order to make another the constructive owner of such stock." |
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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