Control Group Brother-sister relationship

[Stevo-PDX]

For determining a control group under a brother-sister relationship, is the common ownership threshold still 80% and the identical ownership threshold still 50%?

Someone is suggesting that the common ownership threshold has recently been reduced to 50% or some lower percentage than 80%.

Thanks

[JAY21]

I'm pretty sure nothing has changed on those rules. Under a different scenario with a parent-subsidiary (not brother-sister) a common (i.e, 1) 415 limit would be shared if the parent entity ownership is only 50% (not 80%). This is under IRC 415(h). Although that's not your question, I've seen this confused with the brother-sister 80% threshold before, so just in case that's part of the confusion.....

[Stevo-PDX]

I had someone suggest that the common ownership 80% threshold had been eliminated either late 2004 or early 2005.

That's a good point on the shared 415 limitations. I'm pretty sure that the owners are not working for both companies, but will review.

[Kirk Maldonado]

Are you possibly thinking of section 409A?

[Stevo-PDX]

I think that I found the answer in the American Jobs Creation Act. According to a Delloite document on this website, the elimination of the common ownership threshold applies to section 1561, which relates to tax brackets and not 1563 which relates to qualified plans. Status quo for QRP's.

http://benefitslink.com/articles/deloitteETI041008.pdf

page 46

Thanks for your input.

[Belgarath]

I agree. Specifically, see 1563(f)(5) which addresses this question.