Attribution Rules for Ownership Interests

Attribution Rules for a Business Interest

IRS Code § 318 provides the following general attribution rules:

1. An individual is deemed to own the interest held by his or her spouse (other than one who is legally separated), children, grandchildren, and parents;
2. A partner is deemed to own a proportionate amount of any interest held by the partnership; and
3. A corporation is deemed to own a proportionate share of any stock owned by a 50% or more shareholder of the corporation.

Once a family member or entity is considered to own an interest through attribution, the individual or entity isn't considered to own it for purposes of attributing it to another.

Note:  Family attribution does not apply to a sole proprietor or a partnership.

Cross Reference to Internal Revenue Code - Section 318:  Click Here

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