Guest NPWA Posted April 18, 2003 Posted April 18, 2003 I wasn't sure which Board to put this question on--so I'll try it here. It has to do with the controlled group regulations at 1.414©. There is a provision in those regulations that says that you excluded from the calculation stock owned by employees of the subsidiary if that stock is subject to a substantial restriction on disposition that runs in favor of the subsidiary or the partent. (1.414©-3(b)(5)). Assume that Company A is in the controlled group of Company B because lots of stock is held by the employees of Company B and is subject to restrictions on disposition in Company B's favor. Without the exclusion for this type of stock, Company A would not be in the controlled group. Company B files for bankruptcy. Certain employees of Company B who owned stock are terminated in connection with the bankruptcy but still own their stock. Does that Company B stock become "un-excluded" and is now included in the controlled group calculation? If it is, Company A is no longer in the controlled group. I could find no guidance or authority interpreting this provision and wondered if anyone had any thoughts. Some aspect of it just seems too tricky. Any thoughts are greatly appreciated.
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