ServerRaytrace.java

public static RayTraceResult raytraceClosestObject(World world, @Nullable Entity exclude, Vec3d startVec, Vec3d endVec)
	{
		RayTraceResult result = world.rayTraceBlocks(startVec, endVec);
		double blockHitDistance = 0.0D; // The distance to the block that was
										// hit
		if (result != null) blockHitDistance = result.hitVec.distanceTo(startVec);

		// Encloses the entire area where entities that could collide with this
		// ray exist
		AxisAlignedBB entitySearchArea = new AxisAlignedBB(startVec.x, startVec.y, startVec.z, endVec.x, endVec.y,
				endVec.z);
		Entity hitEntity = null; // The closest entity that was hit
		double entityHitDistance = 0.0D; // The squared distance to the closest
											// entity that was hit
		for (Entity entity : world.getEntitiesInAABBexcluding(exclude, entitySearchArea,
				EntitySelectors.NOT_SPECTATING))
		{
			// The collision AABB of the entity expanded by the collision border
			// size
			AxisAlignedBB collisionBB = entity.getEntityBoundingBox().grow(entity.getCollisionBorderSize());
			RayTraceResult intercept = collisionBB.calculateIntercept(startVec, endVec);
			if (intercept != null)
			{
				double distance = startVec.distanceTo(intercept.hitVec);

				if ((distance < blockHitDistance || blockHitDistance == 0)
						&& (distance < entityHitDistance || entityHitDistance == 0.0D))
				{
					entityHitDistance = distance;
					hitEntity = entity;
				}
			}
		}

		if (hitEntity != null) result = new RayTraceResult(hitEntity, hitEntity.getPositionVector());
		if(result == null) result = new RayTraceResult(Type.MISS, endVec, null, new BlockPos(endVec));
			
		return result;
	}