Controlled group

[bzorc]

A doctor owns 100% of his own medical practice. He also owns 100% of a business in a non-medical field. Does this constitute a controlled group?

Thanks for any responses.

[Belgarath]

Yes.

[K-t-F]

The fact that the two businesses are not in the same field (i.e. medical practice and sells car batteries) does not make a difference.... he "controls" both companies by virture of his percentage of ownership.

[bzorc]

I agree. Now suppose the medical practice, consisting solely of the doctor, has adopted a profit sharing plan. I would think that the non-medical company would have to adopt the plan as well, and cover the employees that meet the eligibility requirements. Is that a correct assumption?

Thanks again.

[Belgarath]

Not necessarily. You have to include them for nondiscrimination testing purposes. Suppose the medical company has 15 employees, all of whom are covered. If the nonmedical company has only 5 employees, then they could be excluded and you'd still pass your 70% test.

Of course, in real life the situation is usually exaclty the opposite. They want to cover the business with the owner and spouse, and exclude everyone else!

[Effen]

Now suppose the medical practice, consisting solely of the doctor, has adopted a profit sharing plan

- no way that flys unless the other group has some sort of qualified plan, and even then, you would need to prove that you weren't discriminating.

[Belgarath]

I didn't focus on the words "consisting solely of the doctor." I was thinking more in general terms, as you can see by my example. So I agree with Effen!