§ 318.
(a)
General rule
For purposes of those provisions of this subchapter to which the rules contained in this section are expressly made applicable—
(1)
Members of family
(A)
In general
An individual shall be considered as owning the stock owned, directly or indirectly, by or for—
(i)
his spouse (other than a spouse who is legally separated from the individual under a decree of divorce or separate maintenance), and
(ii)
his children, grandchildren, and parents.
(2)
Attribution from partnerships, estates, trusts, and corporations
(A)
From partnerships and estates
(B)
From trusts
(i)
Stock owned, directly or indirectly, by or for a trust (other than an employees’ trust described in section 401(a) which is exempt from tax under section 501(a)) shall be considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries in such trust.
(ii)
Stock owned, directly or indirectly, by or for any portion of a trust of which a person is considered the owner under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners) shall be considered as owned by such person.
(3)
Attribution to partnerships, estates, trusts, and corporations
(A)
To partnerships and estates
(B)
To trusts
(i)
Stock owned, directly or indirectly, by or for a beneficiary of a trust (other than an employees’ trust described in section 401(a) which is exempt from tax under section 501(a)) shall be considered as owned by the trust, unless such beneficiary’s interest in the trust is a remote contingent interest. For purposes of this clause, a contingent interest of a beneficiary in a trust shall be considered remote if, under the maximum exercise of discretion by the trustee in favor of such beneficiary, the value of such interest, computed actuarially, is 5 percent or less of the value of the trust property.
(ii)
Stock owned, directly or indirectly, by or for a person who is considered the owner of any portion of a trust under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners) shall be considered as owned by the trust.
(5)
Operating rules
(C)
Partnerships, estates, trusts, and corporations
(D)
Option rule in lieu of family rule
(E)
S corporation treated as partnership
For purposes of this subsection—
(i)
an S corporation shall be treated as a partnership, and
(ii)
any shareholder of the S corporation shall be treated as a partner of such partnership.
The preceding sentence shall not apply for purposes of determining whether stock in the S corporation is constructively owned by any person.
(b)
Cross references
For provisions to which the rules contained in subsection (a) apply, see—
(1)
section 302 (relating to redemption of stock);
(2)
section 304 (relating to redemption by related corporations);
(3)
section 306(b)(1)(A) (relating to disposition of section 306 stock);
(4)
section 338(h)(3) (defining purchase);
(5)
section 382(l)(3) (relating to special limitations on net operating loss carryovers);
(6)
section 856(d) (relating to definition of rents from real property in the case of real estate investment trusts);
(7)
section 958(b) (relating to constructive ownership rules with respect to controlled foreign corporations); and
(8)
section 6038(e)(2) (relating to information with respect to certain foreign corporations).
([Aug. 16, 1954, ch. 736], [68A Stat. 99]; [Pub. L. 86–779, § 10(h)], Sept. 14, 1960, [74 Stat. 1009]; [Pub. L. 87–834, § 20(d)(1)], Oct. 16, 1962, [76 Stat. 1063]; [Pub. L. 88–554, § 4(a)], (b)(2), Aug. 31, 1964, [78 Stat. 762], 763; [Pub. L. 97–248, title II, § 224(c)(3)], Sept. 3, 1982, [96 Stat. 489]; [Pub. L. 98–369, div. A, title VII], §§ 712(k)(5)(E), 721(j), July 18, 1984, [98 Stat. 950], 969; [Pub. L. 99–514, title VI, § 621(c)(1)], Oct. 22, 1986, [100 Stat. 2266]; [Pub. L. 105–34, title XI, § 1142(e)(3)], Aug. 5, 1997, [111 Stat. 983]; [Pub. L. 109–135, title IV, § 412(u)], Dec. 21, 2005, [119 Stat. 2638].)