Sec. 318. Constructive ownership of stock
 
 (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.
 (B) Effect of adoption
 For purposes of subparagraph (A)(ii), a legally adopted child
 of an individual shall be treated as a child of such individual
 by blood.
 (2) Attribution from partnerships, estates, trusts, and
 corporations
 (A) From partnerships and estates
 Stock owned, directly or indirectly, by or for a partnership
 or estate shall be considered as owned proportionately by its
 partners or beneficiaries.
 (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.
 (C) From corporations
 If 50 percent or more in value of the stock in a corporation
 is owned, directly or indirectly, by or for any person, such
 person shall be considered as owning the stock owned, directly
 or indirectly, by or for such corporation, in that proportion
 which the value of the stock which such person so owns bears to
 the value of all the stock in such corporation.
 (3) Attribution to partnerships, estates, trusts, and
 corporations
 (A) To partnerships and estates
 Stock owned, directly or indirectly, by or for a partner or a
 beneficiary of an estate shall be considered as owned by the
 partnership or estate.
 (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.
  (C) To corporations
 If 50 percent or more in value of the stock in a corporation
 is owned, directly or indirectly, by or for any person, such
 corporation shall be considered as owning the stock owned,
 directly or indirectly, by or for such person.
 (4) Options
 If any person has an option to acquire stock, such stock shall
 be considered as owned by such person. For purposes of this
 paragraph, an option to acquire such an option, and each one of a
 series of such options, shall be considered as an option to
 acquire such stock.
 (5) Operating rules
 (A) In general
 Except as provided in subparagraphs (B) and (C), stock
 constructively owned by a person by reason of the application
 of paragraph (1), (2), (3), or (4), shall, for purposes of
 applying paragraphs (1), (2), (3), and (4), be considered as
 actually owned by such person.
 (B) Members of family
 Stock constructively owned by an individual by reason of the
 application of paragraph (1) shall not be considered as owned
 by him for purposes of again applying paragraph (1) in order to
 make another the constructive owner of such stock.
 (C) Partnerships, estates, trusts, and corporations
 Stock constructively owned by a partnership, estate, trust,
 or corporation by reason of the application of paragraph (3)
 shall not be considered as owned by it for purposes of applying
 paragraph (2) in order to make another the constructive owner
 of such stock.
 (D) Option rule in lieu of family rule
 For purposes of this paragraph, if stock may be considered as
 owned by an individual under paragraph (1) or (4), it shall be
 considered as owned by him under paragraph (4).
 (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).