Affiliated Service group

[Guest Sieve]

An FSO performs services for a third party, but those services do not fully compelte the job without another set of services provided by a B organization. See, for example, Example 4 in Prop. Treas. Reg. Section 1.414(m)-2©(8).

Must the "significant portion of the business" of the B organization--necessary for a B org. ASG to exist--result from receipts received directly from the FSO, or can those receipts, resulting from the coordination of efforts, come from a third party?

Say, for example, an architectural firm performs 40% of its services for 3rd parties who are referred by a building contractor, but those payments come from the 3rd party. Neither party would have been hired without the architectural firm's rendering of the design and drawings, for which the third party paid. All else being equal--i.e., the other tests of B org. status having been met (which may not be the case in this example)--would the fact that the receipts received by the B org were not paid by the FSO mean there would not be, and could not be, a B org. ASG relationship?

[J Simmons]

An FSO performs services for a third party, but those services do not fully compelte the job without another set of services provided by a B organization. See, for example, Example 4 in Prop. Treas. Reg. Section 1.414(m)-2©(8).

Must the "significant portion of the business" of the B organization--necessary for a B org. ASG to exist--result from receipts received directly from the FSO, or can those receipts, resulting from the coordination of efforts, come from a third party?

Say, for example, an architectural firm performs 40% of its services for 3rd parties who are referred by a building contractor, but those payments come from the 3rd party. Neither party would have been hired without the architectural firm's rendering of the design and drawings, for which the third party paid. All else being equal--i.e., the other tests of B org. status having been met (which may not be the case in this example)--would the fact that the receipts received by the B org were not paid by the FSO mean there would not be, and could not be, a B org. ASG relationship?

Hip shooting (i.e., no authority to cite): I think that the receipts must be from the FSO (not third parties) for a B Org ASG to exist. That appears to me to be a statutory distinction from the A Org ASG scenario where it is the services (not receipts) that can be either directly to the FSO or the third parties.