Controlled Group Issue

[R. Butler]

We are about to takeover Auto Dealer's Plan. Auto Dealer is owned by ABCD Partnership. I am trying to analyze controlled group issues. Clearly I need to be concerned about other businesses owed ABCD Partnership. It seems to me I should also be concerned with any underlying businesses that may be commonly owned by A, B, C & D as individuals.

Am I missing something here? I just want to be safe; employer's are often times reluctant to give me such information & I don't want to ask for more than I have to.

[mbozek]

What kind of Plan? Sponsors of underfunded DB plans are subject to liability to the PBGC and employers who participate in multiemployer plans are subject to withdrawal liability by the union. There is extensive case law on the application of the IRC 414© rules to businesses owned by individuals who are plan sponsors under the PBGC provisions of ERISA.

[jaemmons]

R.Butler,

I believe you are on the right track. Under IRC 1563(e)(2) a partner who owns a 5% or more interest in a partnership is deemed to own, on a prorata basis, any stock owned by the partnership in a corporation. As such, any corporations owned by the individual partners need to be looked at also for controlling interests, since the stock owned in the Auto Dealersip by the partnership is generally treated as owned by each individual partner, subject to my previously mentioned ownership minimum.

[R. Butler]

Thanks.