controlled group question

[K2retire]

Husband and wife are each 100% owners of their own professional corporation. I am told that neither has any management responsibility for the other's company, they do not live in a community property state and do not have minor children. They claim this makes the controlled group rules not apply to their situation.

However, since both are physicians and could own the other's stock without violating any professional licensing or other legal requirements, I'm having a hard time agreeing with them. Am I overlooking something?

[Belgarath]

Check 1563(e)(5). If you satisfy the requirements (and as you mention, no community property state) then you should be ok. I'd be very careful on "management responsibility" that you mention. Although they may not have any active management responsibilities, they often have a title, which allows them to sign checks or something in an emergency.

We always tell them to get an opinion from a competent attorney, but they rarely do...

[K2retire]

And then there's always the question of competent. . . .