Now a controlled group

[Guest RBlaine]

Father and son are 50% owners in an incorporated business (Company A). Father and son are the only employees.

Son has self employed income from a flower and gift shop (Company B) that is run by him and his wife. Son is the 100% owner of the gift shop. The Son and his wife are employees and they have 2 other employees.

These have not been part of a group under common control.

Company A sponsors a profit sharing plan.

December 1993, the father dies leaving the son as 100% owner of Company A. They are now a group under common control.

Does the grace period for participation due to a change in the controlled group? When does the grace period end?

The answers seem to be yes and December 31, 2004. Any corrections? If this is accurate, can I file the IRS Form 5500-EZ for 2004?

[Ron Snyder]

A couple of discrepancies in your post: (i) what happened from 1993 to 2003? was that a typo? (ii) Are you sure that the entities were not an affiliated service group already?

Assuming a typo and no ASG, I believe that the "grace period" you refer is what we call the "remedial amendment period". It ends on the earlier of the due date or the actual filing date of corporation A's tax return.

[Guest RBlaine]

Yeah, that should be 2003 for the death. No ASG.

The grace period that I'm wondering about is relating to changes in the controlled group and discrimination testing. Usually, this is mentioned in relation to mergers or purchases where one or more of the entities has a plan. 410(b)(6)©, I think is the right section.

I don't see any reason that the change caused by a death should be treated differently than a change brought about by a purchase.