(1) An indirect attribution interest that an entity (in this section called the bottom entity ) holds in a CFC or CFT (in this section called the top entity ) at a particular time is calculated in accordance with this section.
(2) An interposed entity is not to be taken into account in calculating an indirect attribution interest unless the entity is a CFE.
(3) If there is only one entity interposed between the bottom entity and the top entity, the indirect attribution interest is calculated by multiplying the attribution tracing interest that the bottom entity holds in the interposed entity by the attribution tracing interest that the interposed entity holds in the top entity.
(4) If there are 2 entities interposed between the bottom entity and the top entity, the indirect attribution interest is calculated:
(a) by multiplying the attribution tracing interest that the bottom entity holds in the first interposed entity by the attribution tracing interest that the first interposed entity holds in the second interposed entity; and
(b) by multiplying the result of the calculation referred to in paragraph (a) by the attribution tracing interest that the second interposed entity holds in the top entity.
(5) If there are 3 or more entities interposed between the bottom entity and the top entity, the indirect attribution interest is calculated:
(a) by multiplying the attribution tracing interest that the bottom entity holds in the first interposed entity by the attribution tracing interest that the first interposed entity holds in the second interposed entity; and
(b) by multiplying the result of the calculation referred to in paragraph (a) by the attribution tracing interest that the second interposed entity holds in the third interposed entity;
and so on, ending with a multiplication by the attribution tracing interest that the last interposed entity holds in the top entity.
(6) For the purposes of this section, an entity (in this subsection called the second entity ) is interposed between 2 other entities (in this subsection called the first entity and the third entity respectively) if, and only if:
(a) the first entity has an attribution tracing interest in the second entity; and
(b) the second entity has an attribution tracing interest in the third entity.