Affiliated Service Groups

[Guest Laura Millwood]

When do the affiliated service group rules (414(m)(2))come into play when you are dealing with service organizations such as law firms? We have a situation where law firm A is opening a new law firm B; ownership in B is 50% by firm A, 25% by unrelated individual, 25% unrelated individual. The firms will not refer business to each other. I thought there would be no affiliated service group issue, but an example on some materials I have makes me question that since there is ownership between the two.