What are the rules for attributing stock options for ownership? I guess more specifically, how do you attribute?

At the most basic level, if you have an option to buy stock, you are deemed to own the stock. As to what constitutes an "option" it gets trickier. I know there are a couple of Revenue Rulings addressing this - 68-601 and 89-64, but all this is something we refer to the client's attorney anyway.

For some good information on this, I'd recommend Derrin Watson's book, "Who's the Employer - and although I haven't looked up this specific subject in Sal Tripodi's Erisa Outline Book, I'd be surprised if he doesn't have some good information as well.

Thanks for comments. FYI....Sal is very vague on the issue of stock options. He does say that they should be counted in determining ownership, but as to the "how", he simply states there is no clear guidance.

If you want to go to the source, look at section 414© and the regs under that provision.