Question 1

What is constructive ownership?

Accepted Answer

Constructive ownership means you are treated as owning stock or interests that are actually owned by related parties (spouse, children, parents) or controlled entities. This prevents circumventing tax rules by distributing ownership among family members.

Question 2

How does family attribution work?

Accepted Answer

Spouse's stock is attributed to each other automatically. Minor children's stock is attributed to parents. Parents' stock is attributed to children. Siblings' stock is NOT attributed to each other under Section 267 rules.

Question 3

What is entity attribution?

Accepted Answer

If you own more than 50% of a corporation, partnership, or trust, the entity's ownership in other businesses is attributed to you. This prevents indirect control through intermediary entities.

Question 4

Why do constructive ownership rules matter?

Accepted Answer

These rules affect: (1) Related party loss disallowance under Section 267, (2) Passive activity tests under Section 469, (3) At-risk calculations under Section 465, (4) Affiliated group status under Section 1504 for consolidated filing.

Question 5

Can constructive ownership exceed 100%?

Accepted Answer

Yes! Attribution can come from multiple sources. For example, you might directly own 30%, spouse 25%, children 25%, and a controlled corporation 30% = 110% constructive ownership. Multiple attribution paths can overlap.

Source	Percentage	Rule
Direct Ownership	30%	Your actual ownership
Spouse	20%	Spouse ownership attributed to you
Children	15%	Minor children ownership attributed
Parents	10%	Parent ownership attributed
corporation	60%	corporation ownership attributed (60% owned)

Constructive Ownership Rules Calculator

Constructive Ownership Total

Attribution Breakdown

Section 267 Related Party

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Rules Summary

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