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The proposed regulations for the affiliated service group rules exclude corporations, other than professional service corporations, from the definition of a first service organization.  I can find any guidance on whether a subchapter s-corporation is a corporation for this purpose.  Is anybody aware of any guidance or has anybody heard anything about this, perhaps informally from the IRS?  

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I'm not sure I understand your question.  A First Service Organization could be a corporation, partnership, or any other organization where the performance of services is the principle business.  A professional service corporation must be a corporation; and that is the only type of corporation that can be a First Service Organization to an A-Org.

I 'think' that's what you're getting at.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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As ETA mentioned, the rule that a corporations other than a professional service corporation can not be a FSO only applies to A-org groups.

An S-corporation is a corporation - just because it elects to be taxed as a pass-through entity does not make it not a corporation. I think sec. 1361 is pretty clear:

(a) S corporation defined

(1) In general

For purposes of this title, the term "S corporation" means, with respect to any taxable year, a small business corporation for which an election under section 1362(a) is in effect for such year.

(2) C corporation

For purposes of this title, the term "C corporation" means, with respect to any taxable year, a corporation which is not an S corporation for such year.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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This is the same line of thought I had.  I was just wondering if there might be any guidance somewhere which says an S-Corporation is not a "corporation" for purposes of the exemption that excludes corporations  (other than PCs) from the definition of an FSO.  For example, in 318 an S-Corp is treated as a partnership, but that is statutory.  

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318(a)(5)(E) states that it only applies to "this subsection," i.e. 318(a). Now 414(m) does include 318(a) by reference for purposes of determining ownership, but 318(a)(5)(E) explicitly does not apply for purposes of determining constructive ownership of the S-corp, which would be the key element in determining whether the A-org is a shareholder (or partner) in the FSO.

I think you're safe to consider the S-corp a corporation.

I don't know if Derrin Watson is still answering questions here, but I would be curious to see if he agrees: https://benefitslink.com/cgi-bin/qa.cgi?db=qa_who_is_employer

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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3 hours ago, ERISAAPPLE said:

This is the same line of thought I had.  I was just wondering if there might be any guidance somewhere which says an S-Corporation is not a "corporation" for purposes of the exemption that excludes corporations  (other than PCs) from the definition of an FSO.  For example, in 318 an S-Corp is treated as a partnership, but that is statutory.  

The answer is NO; there is no such guidance because there is no such rule.

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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43 minutes ago, Larry Starr said:

The answer is NO; there is no such guidance because there is no such rule.

Larry are you saying there is no rule because the regs are proposed?  Are you saying there is no rule that a corporation (other than a professional corporation) is excluded from the definition of FSO for A-orgs?  Are you saying there is no rule that an S-Corp is excluded?  Are you saying something else?

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On 8/1/2018 at 11:28 PM, ERISAAPPLE said:

Larry are you saying there is no rule because the regs are proposed?  Are you saying there is no rule that a corporation (other than a professional corporation) is excluded from the definition of FSO for A-orgs?  Are you saying there is no rule that an S-Corp is excluded?  Are you saying something else?

The question you asked was:    I was just wondering if there might be any guidance somewhere which says an S-Corporation is not a "corporation" for purposes of the exemption that excludes corporations  (other than PCs) from the definition of an FSO. 

The answer to that (as I said) is NO. There is no rule that says an S Corp is NOT a corp for this purpose. You are looking for something that does not exist and is not a fact. You will not find "guidance" on something that does not exist and is not contemplated in the current rules.  Hope that helps. 

PS: just landed in Amsterdam after an all night flight; in the hotel for a few hours of shuteye!

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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