Controlled Group

[cpc0506]

Company 1 is Publicly traded.

Company 2 is owned 80% by Company 1.

Company 3 is owned 50% by Company 1 , the other 40% is owned by the Company 3's ESOP.

What are the Controlled Groups here? I definitely know that Company 1 and 2 are a parent subsidiary CG. But what about Company 1 and 3? Do I ignore the ESOP ownership?

Can anyone provide guidance as where I can find regulations to answer this question?

Thanks.

[Guest Sieve]

ESOP stock is ignored for purposes of determining the parent-subsidiary status of Co. 1 & Co. 3 since Co. 1 owns at least 50% of Co. 3. (IRC Section 1563©(2)(A)(i).)

[cpc0506]

ESOP stock is ignored for purposes of determining the parent-subsidiary status of Co. 1 & Co. 3 since Co. 1 owns at least 50% of Co. 3. (IRC Section 1563©(2)(A)(i).)

So, is my thinking correct then, that if Company 1 owns 50% of Company 3, and the other 40% of Company 3 stock is ignored due to the ESOP, then Company 1 and 3 have a parent-subsidiary relationship, since Company 1 control of Company 3 is now 50% divided by 60% , which is greater than 80%.

[Guest Sieve]

That's correct.