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Affiliated service group?


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Individual owns 70% of Co. A - a real state company (remaining 30% owned by unrelated individuals). Same individual owns 100% of Co. B - a manufacturing company. The real estate company owns the land on which the manufacturing company sits. Affiliated service group? Does it matter if the real estate company is a corporation or partnership?

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For retirment plan purposes, these are not "a Group", affiliated service, management or controlled.

Besidess this point, usually the real estate company has no compensation paid and no employees. So usually I don't need to spend much time looking at this. Hope this helps.

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Thanks but from the small amount of info I received the real estate company does have "employees" - not real esate agents. There is no management group or a controlled group but was just wondering if it possibly could be an ASG.

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For that you will need details on what work for the other company the employees of the real estate company provide:

Then I would go to "Who's the employer" by Derrin Watson. I highly recommend it. If you don't have that book I would suggest the "ERISA Outline" By Sal Tripodi.

Unless you are smarter than Einstein and Stephen Hawkins combined, I would not recomend trying to sort this out referring to the code.

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First and foremost, in order to be an ASG, one of the companies has to be a service organization...real estate sales and real estate development are not services.

If neither company is a service organization, neither can be a First Service Organization in an A_Org or a B-Org determination

If one company provides management services to the other, however....

Anyway you don't have near enough info

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I wouldn't automatically assume that a real estate company isn't a service organization. Even though it isn't one of the automatic categories included as a service orgainization, that listing is not the exclusive means of determining whether or not a business is a service organization. It can also be considered a service organization if capital isn't a material income-producing factor. Under Proposed Reg. 1.414(m)-2(f)(1), capital is not a material income-producing factor if the income from the business comes promarily from fees or commissions for ersonal services performed by one or more individuals.

Your situation probably isn't an ASG, but I'd just be cautious about assuming who is and isn't a service organization. I second the comment to use Derrin Watson's book as a reference tool! (And we always tell them to consult their attorney for such determinations anyway.)

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