family attribution & controlled group woes

[Guest dubya]

Actually, the "woe" is on my part, as I routinely turn family ownership mole holes into controlled group mountains. Any help on the following is appreciated:

I was given the following information: mother/father/adult son own 100% of company A (C-Corp). Same father & son own 70% of company B (S-corp). The other 30% is owned by 12 other individuals, all of whom have roughly equal ownership stake, and none of whom actually perform services for the company. Do I have a controlled group, and do I need to know the actual ownership percents of the mother, father & son in each company to make the determination? I looked at this as a parent/subsidiary and saw less than 80% and thought no controlled group, but I'm not certain of that. Mother/father/son want to start a plan for the company A and want to know if company B needs covered. They wouldn't be too bothered if they did have to include them.

Thanks.

[Archimage]

You thought right. From the information you gave it is not a controlled group since ownership is less than 80% for company B.

[Lame Duck]

dubya,

From the information you provided, it appears to me to be a brother/sister arrangement, rather than parent/subsidiary, in that individuals own both A and B rather than A owning B. That notwithstanding, your analysis still appears to be correct, since father and son do no own at least 80% of B, provided that the ownership of some or all of the additional 12 owners does not need to be attributed to either father or son. I understand your "woe". I probably do at least a hundred controlled group analyses a year and I still find it to be one of the most confusing and complex aspects of retirement plan law.