Control Group?

[401king]

Here are the facts:

Company A: Father owns 100%, son 1 (VP of comp. A), son 2, son 3 all receive W2 compensation from Company A

Company B: Son 1 owns 100% and receives W2 compensation from Company B (W2'd from both companies) -- no other family members work for Company B.

Based on this simplified scenario, could you tell me if there is a control group here? Would Son 1 be considered a 100% owner for control group determination because of attribution? OR Would the Father's will actually come into play to determine whether or not Son 1 is creating a control group (i.e. Father leaves 80% of comp. A to Son 1)?

Thanks in advance.

[Guest Sieve]

The will is immaterial. There is not a controlled group here because, assuming Son is at least age 21, attribution will attribute to father only the stock that son owns in Dad's corp., and son will only be attributed the stock that dad owns in son's co. So, there is not attribution between father & son.

The rule of attribution is different for HCE & TH purposes, and son will be considered to own Dad's stock of Company A in both instances so that he will be an HCE and key employee of A.

[401king]

Thanks, Sieve.

It appears now I'm going to have to look into an Affiliated Service Group issue, but first I'll need to find out whether or not the two companies actually do business with each other and, if so, how much.

[R. Butler]

How old is Son 1?

Is either co. A or B a serivce org.?