A Dr. owns 100% of two unrelated companies, his practice and a hair salon. His children are not employees of his practice.

can he transfer ownership of the hair salon to his children? and if so, how much ownership can he keep?

How old are the kids? Is it a community property state?

older then 21. and what do you mean about community property state?

Just checking all the bases. One more thing, are the companies an affiliated service group? Well, ok, you said unrelated. Did you mean unrelated in the affiliated service group sense or unrelated just because they seem to do different things? That is, have you had a formal analysis done which confirms they aren't an affiliated service group? I admit to not giving this any thought other than to ask the question, in case somebody else seems to think that the answer is obvious.

the actions of one corp does not affect the actions of the other corp. No money or services are exchanged. This is my first ownership question so I apologize if i don't know what info to give. Thank you for you help.

Well, since both are service companies, the answer might be different than if one or both weren't.

Now that we have all the facts, maybe somebody can give a quick rundown.

We don't have any facts about any retirement plans for any employees of any employer, prospective or otherwise.

The doctor's practice has a PS plan the salon nothing.

Basically, he owns 100% of both business. He wants to get rid of the salon so he doesn't have to cover them in the PS plan or increase benefits to those who are currently eligible.

Ignoring the reasons he wants to do this, and in a very general way:

If he retains 50% or less ownership in either the voting stock or stock value of the salon, there wouldn't be family attribution from his adult children, and no CG. That's also assuming no additional attribution from options, etc.

He can still exclude the salon employees even if a CG as long as he can pass coverage testing. But he probably can't, or this question wouldn't be coming up.

Doesn't sound like any ASG here.

I can't stress enough that a competent attorney should always be consulted on these issues.

Thank you all very much.

That's what I thought about the 50% ownership and Family attribution. I'm going to have him talk to a lawyer instead of giving him my opinion.