Controlled Group Fact Pattern?

[Gary Lesser]

Two LLC's are owned as follows by W, X, Y, and Z (all unrelated adults). Are they a brother-sister controlled group?

Since Y and Z have no interest in LLC-B, it wd appear that the more than 50% rule is not met and they are not controlled under Section 1563. Does anyone agree or disagree?

Individuals.....................LLC-A.................LLC-B

W .......................................25%.................. 50%

X .......................................25%.................. 50%

Y .......................................25%

Z .......................................25%

[Appleby]

I agree- but from a different perspective.

The 50 % rule (effective control) has been met ( W and X)

But the 80% rule ( controlling interest ) has not been met.

Therefore… no brother-sister controlled group exists.