Reginald and Roland (Reginald's son) each own 50% of the stock of Robin Corporation. Reginald's stock interest is entirely redeemed by Robin. Two years later, Reginald loans Robin $250,000. The loan to Robin Corporation does not constitute a prohibited interest for purposes of the family attribution waiver.

Question

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The loan from Reginald to Robin Corporation does not constitute a prohibited interest because the family attribution rules, which might otherwise attribute Roland's stock ownership to Reginald, do not apply to a bona fide debt arrangement. The waiver for family attribution applies to genuine creditor-debtor relationships, allowing Reginald to lend money to the corporation without his interest being considered prohibited due to family attribution rules.

Reginald and Roland (Reginald's Son) Each Own 50% of the Stock