Applicability of Code Section 1563(e)(6) in a Community Property State

[Guest San Diego Benefits Guy]

A doctor client in California maintains a medical practice ("Company A") that employs several common-law employees that are covered under a 401(k) plan maintained by Company A. The doctor's wife owns 100% of the stock in Company B, that is engaged in the real estate business. There is no business relationship between Company A and Company B. Additionally, the husband is not involved in Company B, not is the wife involved in Company A. Company B proposes to establish a defined benefit pension plan thay will cover only the wife, Company B's sole employee. Under 1563(e)(6), we are taking the position that the stock in Company B is excluded from the attribution rules and there is no controlled group present.

I understand that Mr. Watson's book states that in a community property state, there would be attribution. Is anyone aware of any cases or PLRs on point?

Thanks. Ed