controlled group - single board of directors?

[WCC 14]

Two tax exempt organizations create an affiliation (their words) by combining service offerings. As part of the affiliation, they created a single board of directors which governs both organizations. The board is comprised of an equal number of members from each organization. I have reviewed the controlled group rules relating to control of directors/trustees and will make a referral to an attorney. However, I am curios if this is a straight forward issue. Since there is a single board is it clear a controlled group exists? They are telling me that since half the board is selected from each entity, neither organization has control over the the other. Therefore, they are stating the 80% control and/or common representation of directors/trustees is not applicable. 

Thoughts?

[Luke Bailey 258]

If there is 100% board overlap (which sounds like what you have, i.e., each entity has a board, and each board is comprised of the same individuals), then there would be a controlled group. See 1.414(c)-5(b). There are no "soft" factors to be taken into consideration that would vary that theoretical result. Of course, I have not analyzed your actual situation, so am only speaking hypothetically, WCC.

[PensionPro 31]

8 hours ago, WCC said:

They are telling me that since half the board is selected from each entity, neither organization has control over the the other. 

Thoughts?

If the same board has control over the operation of both entities then it sounds to me there would be a controlled group.  If the board is structured so it does not control both entities then it may not be a controlled group in which case you should engage counsel to review the governing documents.