§ 1.544-3 Constructive ownership by reason of family and partnership ownership.

(a) The following example illustrates the application of section 544(a)(2), relating to constructive ownership by reason of family and partnership ownership. By applying the statutory rule provided in section 544(a)(2) five individuals own more than 50 percent of the outstanding stock as follows: Individual A represents the obvious case where the head of the family owns the bulk of the family stock and naturally is the head of the group. A's partner owns 10 shares of the stock. Individual B represents the case where he is still head of the group because of the ownership of stock by his immediate family. Individuals C and D represent cases where the individuals fall in groups headed in C's case by his wife and in D's case by his brother because of the preponderance of holdings on the part of relatives by marriage. Individual E represents the case where the preponderant holdings of others eliminate that individual from the group. (b) For the restriction on the applicability of the family and partnership ownership rules of this section, see paragraph (b) of § 1.544-1. For rules relating to constructive ownership as actual ownership, see § 1.544-6.