- 24 -
our interpretation of the statute (as well as those of the
parties). For instance, if a husband and wife each own shares of
a loss corporation, and the husband purchases additional shares
from his mother, the ownership percentage of the family unit
centered on the wife would increase as a result of the otherwise
exempt transaction.21 The tiebreaker rule precludes that result
by treating the wife as a member of the family unit centered on
her husband rather than a member of the family unit centered on
her, since such inclusion would result in the smallest increase
(zero) in percentage ownership.22 See supra part I.C.; supra note
21.
IV. Conclusion
We hold that the family aggregation rule of section
382(l)(3)(A)(i) applies solely from the perspective of
individuals who are shareholders (as determined under the
21 Since the purchased shares would be included in the
holdings of the family unit centered on the husband both before
and after the sale, the percentage ownership of the husband-
centric family unit would remain unchanged. However, since the
purchased shares would not be included in the holdings of the
family unit centered on the wife until after the sale, the
percentage ownership of the wife-centric family unit would
increase as a result of the sale. A similar result would occur
if the purchaser’s child (rather than his wife) were a
shareholder.
22 As is the case with changes in family status, see supra
note 16, this problem did not arise under former sec. 382(a),
since the “vicarious” ownership increase would not have been
attributable to a purchase by the wife. See former sec.
382(a)(1)(B)(i).
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011