26 C.F.R. § 1.544-2

Constructive ownership by reason of indirect ownership

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The following example illustrates the application of section 544(a)(1), relating to constructive ownership by reason of indirect ownership:

Example.A and B, two individuals, are the exclusive and equal beneficiaries of a trust or estate which owns the entire capital stock of the M Corporation. The M Corporation in turn owns the entire capital stock of the N Corporation. Under such circumstances the entire capital stock of both the M Corporation and the N Corporation shall be considered as being owned equally by A and B as the individuals owning the beneficial interest therein.