[Code of Federal Regulations]
[Title 26, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.318-1]

[Page 65]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.318-1  Constructive ownership of stock; introduction.

    (a) For the purposes of certain provisions of chapter 1 of the Code, 
section 318(a) provides that stock owned by a taxpayer includes stock 
constructively owned by such taxpayer under the rules set forth in such 
section. An individual is considered to own the stock owned, directly or 
indirectly, by or for his spouse (other than a spouse who is legally 
separated from the individual under a decree of divorce or separate 
maintenance), and by or for his children, grandchildren, and parents. 
Under section 318(a)(2) and (3), constructive ownership rules are 
established for partnerships and partners, estates and beneficiaries, 
trusts and beneficiaries, and corporations and stockholders. If any 
person has an option to acquire stock, such stock is considered as owned 
by such person. The term option includes an option to acquire such an 
option and each of a series of such options.
    (b) In applying section 318(a) to determine the stock ownership of 
any person for any one purpose--
    (1) A corporation shall not be considered to own its own stock by 
reason of section 318(a)(3)(C);
    (2) In any case in which an amount of stock owned by any person may 
be included in the computation more than one time, such stock shall be 
included only once, in the manner in which it will impute to the person 
concerned the largest total stock ownership; and
    (3) In determining the 50-percent requirement of section 
318(a)(2)(C) and (3)(C), all of the stock owned actually and 
constructively by the person concerned shall be aggregated.

[T.D. 6969, 33 FR 11999, Aug. 23, 1968]