### Question
How is the "key person" defined?


### Answer
The term **key person** is defined in *26 U.S.C. § 264* as follows -

> an officer or 20-percent owner, except that the number of individuals who may be treated as key persons with respect to any taxpayer shall not exceed the greater of—


(A) 5 individuals, or


(B) the lesser of 5 percent of the total officers and employees of the taxpayer or 20 individuals

#### Citation:
  - *26 U.S.C. § 264*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter B-Computation of Taxable Income > PART IX-ITEMS NOT DEDUCTIBLE**

