Controlled Group -- Attribution

[Guest rwest]

Dad owns 75% in A, minor son owns 0% and outsider owns 25%. Minor son owns 75% in B, Dad owns 0% and different outsider owns 25%. With attribution, minor son owns 75% in A, and Dad owns 75% in B. Because a different third party owns the 25% in B, it would seem we do not meet the 80% test. But do we add 75% for both Minor and Dad (= 150%) to determine if 80% of interests owned by same 5 or fewer persons? It would seem not because we would be counting the same interest twice.

[E as in ERISA]

I think that you'd essentially count the father and minor son as one. Together with the outsider, they meet the 80% test (they have 100%). They also meet the 50% test (counting only the identical interests -- and attributing all 75% to either the father or minor son -- there is also 100% identical interest in each).

I think that the bottom line is that the father would be assumed to be in a position to make all the decisions about each company -- and accordingly he is expected to make uniform decisions about the plans for both companies.

[Lame Duck]

Maybe I misread the original post, but I thought there were two separate outsiders, one (Outsider 1) owning 25% of A and the second (Outsider 2) owning 25% of B. In that case, I think rwest's interpretation is probably the correct one, since the 80% test is not met. Father and minor son's ownership is attributable to each other, so the more than 50% identical ownership test is met, but if you can only count individuals who own an interest in each entity for purposes of meeting the 80% ownership test, I don't see a controlled group. Does anyone else reach the same conclusion?

[Guest rwest]

In reply to Lame Duck's answer, yes, the outsider in Org-B is a different person from the Outsider in Org-A.

[JanetM]

I thought you only attributed ownership of sons interest to father if son was under 21. If son is over 21 I don't see any common ownership - so no control group.

[Mike Preston]

Hard to be a minor son and be over 21 at the same time.