Appropriateness of deduction in ASG setting

[billfgrady]

Has the Service changed its position on whether a corporation can deduct contributions made for employees of another controlled group member? My understanding is that it is not generally an ordinary and necessary business expense for one corporation to provide retirement benefits for the employees of another corporation, even if the two corporations are in a controlled group. Ours is NOT a situation that would be governed by Section 404(a)(3)(B), which permits one company of a controlled group to deposit a profit sharing contribution for another member of a controlled group if the other member does not have profit and the contribution is based upon the profitability of the company. Rather, profit sharing contributions are made notwithstanding earnings and profits.