Effect of Cessation of Controlled Group?

[chris]

Two corp's. -- Corp X and Corp Y. Corp X maintains a PSP. A and B own shares in Corp. X 50/50. A, B and C own shares in Corp. Y 1/3 each. C buys A's and B's shares in Corp. Y. Is the vesting of the employees of Corp. Y determined under the partial termination rules? ....i.e., now treated as 100% vested if partial termination has occurred, otherwise, vesting is as per schedule in effect at time of cessation of controlled group status?

[Blinky the 3-eyed Fish]

I don't understand your question on many levels.

1 - You say X maintains a PSP, yet your question relates to the employees of Y. Is this a standardized prototype?

2 - Why do you say this was a controlled group in the first place? There is not 80% common ownership amongst the owners of X and Y.

More details please.

[chris]

Actually, the question came to me from an accountant. I haven't had to deal with the controlled group rules so I figured I would pass it on to the experts. Since A and B do not own 80% or more of Corp Y, then it appears there may no controlled group issue.... Thanks.