Attribution Rules

Attribution Rules
See also

Attribution Rules are rules that protect against tax fraud by investors. These provisions prevent the transfer of assets (by investors) to family members in lower tax groups[1][2][3][4]:

  • Attribution is the concept of treating a person as owning an interest in a business that is not actually owned by that person. Attribution may result from family or business relationships”.
  • Each rule is a combination of choices in the following four domains: unit of analysis (patient versus episode of care); signal for responsibility (professional costs versus number of evaluation and management visits); number of physicians that can be assigned responsibility (single physician versus multiple); and minimum threshold for assigning responsibility (majority of visits or costs versus plurality of visits or costs)” .
  • Attribution rules are necessary to meet the strong incentive to avoid the punitive personal holding company provisions and the relative ease with which options can be used to evade the 50% ownership test”.
  • Option attribution rules should be sufficiently broad to prevent tax avoidance, but sufficiently narrow to avoid encompassing arrangements not motivated by a desire to manipulate stock ownership”.

Definition of Attribution

Attribution refers to assigning certain features to a person or object. It can also be used to describe the reason (certain actions) that affect an event. “The concept of attribution (constructive ownership) is one of the most difficult concepts to understand and correctly apply in tax law today. Attribution is the imposition of stock ownership upon an individual or entity from another individual or entity for taxation purposes.' This concept is further complicated when the already attributed stock is reattributed to a third individual or entity” [5].

Stock Attribution Rules

Stock attribution rules -to qualify for deal or trade treatment, a stock recovery for the most part must result within the considerable lessening within the shareholder's possession intrigued n the corporation. Within the nonattendance of this diminishment in proprietorship intrigued, the recovery continues are saddled as profit salary. In detenmining whether a stock recovery has suffi-cientlhy diminished a shareholder's intrigued, the stock possessed by certain related parties is atuributed to the recovering shareholder. This the stock attribution rules must be considered in applying the stock recovery arrangements. Beneath these rules related parties are characterized to incorporate the taking after family individuals life partners, children, grandchildren and guardians. Attribution moreover takes put from and to organizations domains, trusts, and corpoations (50 percent or more proprietorship required within the case of customary enterprises)[6].


  1. Lawson L., Naleson J. 2016,p 11
  2. Mehrotra A. , Adams J. L., Thomas J. W., McGlynn E. A. 2010,p 4
  3. Winston J. G. 1977,p 15
  4. Winston J. G. 1977,p 26
  5. Sunukjian A. 1989,p 2
  6. Willis E., Hoffman W., Maloney D., Raabe W. 2010


Author: Magdalena Łach