4975 Disqualified Person Question

[Guest cgriffin]

Hello!

I have searched this board for an answer to this question but have been unsuccessful. Any help would be most appreciated.

H&W own and operate totally separate businesses. Both are 100% owners of their respective S corporations, and are not employees of their spouse's corporation. W wants to purchase an office condo in her retirement plan and lease it to H's corporation.

4975(e)(2)(G) includes corporations as a disqualified person if 50% of the stock is owned by someone in 4975(e)(2)(A), (B), ©, (D), or (E) but does not include (F), which is "family members."

So, it would seem that although H individually is a disqualified person via his status as a relative (i.e. 4975(e)(2)(F)), it appears H's corporation is not disqualified since 4975(e)(2)(F) family members are not listed as a type of improper shareholder under IRC Sec. 4975(e)(2)(G).

This does not seem logical to me.

What am I missing? Is the answer that W is deemed to be an owner of H's corporation under the controlled groups provisions in 1563?

Many thanks.

[Guest cgriffin]

oops

I think I may have found the answer ... right there in 4975:

4975(e)(4) STOCKHOLDINGS. --For purposes of paragraphs (2)(E)(i), and (G)(i) there shall be taken into account indirect stockholdings which would be taken into account under section 267©, except that, for purposes of this paragraph, section 267©(4) shall be treated as providing that the members of the family of an individual are the members within the meaning of paragraph (6).