A sub-S corporation as part of the Controlled Group

[Guest Iwonder]

4 companies are, through ownership, in the same controlled group.

One company insists that it should not be considered a member of the controlled group because it is "just a sub-s corporation" and the company has never been used to control income or accumulate profits.

I have never before heard this type of argument. Is there merit to this argument for not being considered part of a controlled group of companies?

Any tax-gurus available to weigh in?

Thank you, thank you

[Guest Sieve]

S-corps can be members of a controlled group just like any other corps or partnerships or sole-proprietorships--at least for pension purposes (under IRC Sections 414(b) & © & 1563). I don't know the rules about filing consolidated returns, however.

[J Simmons]

What? Doesn't an S corporation mean I have a "Get out of RULES Free" card?

I've heard the claim in the context of contol and affiliated service groups time and again from one-trick ponies all of whose clients are in S corporations (or, alternatively, all in LLCs).

[Guest mjb]

4 companies are, through ownership, in the same controlled group.

One company insists that it should not be considered a member of the controlled group because it is "just a sub-s corporation" and the company has never been used to control income or accumulate profits.

I have never before heard this type of argument. Is there merit to this argument for not being considered part of a controlled group of companies?

Any tax-gurus available to weigh in?

Thank you, thank you

IRC 1371(a) "Except as otherwise provided in this title ...Subchapter C shall apply to a subchapter S corporaton and its shareholders." Title refers to the IRC.

[Guest Iwonder]

All the information provided is very helpful and just what is needed to move on. Thank you everyone.

Tax gurus, you rock!