Brother-sister Corps

[CharlesLeggette]

Neither corp delivers svcs to the other, so no ASG issues.

Case 1:

Corp A is owned as follows by 4 docs and a separate corp

doc a 12%

doc b 12%

doc c 12%

doc d 13% - total 49%

corp b 51%

Corp B is owned 100% by indiv x and y evenly

docs own no part of Corp B

Are A and B Bro-sister?

Case 2:

Corp A is owned as follows

doc a 6%

doc b 6%

doc c 6%

doc d 3% - total 21%

corp b 79%

Corp B is owned 100% by indiv x and y evenly

docs own no part of Corp B

Are A and B Bro-sister?

[Belgarath]

While I hate CG/ASG questions, I'll give it a shot.

No, and no. I'm assuming there is not any other attributed ownership, etc., etc...

[CharlesLeggette]

While I hate CG/ASG questions, I'll give it a shot.

No, and no. I'm assuming there is not any other attributed ownership, etc., etc...

Can you elaborate on why....while I agree with you, I am nervous that 5 or fewer entities own Corp B.

[Belgarath]

It has to be the same 5 or fewer shareholders who own (or are deemed to own) stock in both corporations. So if Owner #1 owns 10% of corporation A, and zero% of corporation B, then there is zero ownership for purposes of the CG test. Or if you change the percentages to 10% of A and 5% of B, then for purposes of the test, there is only 5% ownership. See IRC 1563 and the accompanying regulations, as well as the Vogel Fertilizer decision.

[CharlesLeggette]

It has to be the same 5 or fewer shareholders who own (or are deemed to own) stock in both corporations. So if Owner #1 owns 10% of corporation A, and zero% of corporation B, then there is zero ownership for purposes of the CG test. Or if you change the percentages to 10% of A and 5% of B, then for purposes of the test, there is only 5% ownership. See IRC 1563 and the accompanying regulations, as well as the Vogel Fertilizer decision.

OK, so what if the docs deliver services to the patients of the hospital owned 100% by Corp B. Does this change anything.

[Belgarath]

Well, now you are changing the rules a bit. The OP said there was no delivery of services to other corp so no ASG issues.

The ASG rules are so fact specific that I wouldn't even attempt a guess without a whole lot of information. We never actually make the determination (nor do we for CG, as far as that goes) - we require that the client make the determination, presumably in conjunction with legal counsel.

[Guest Sieve]

Charles --

If anything, A & B would be parennt-subsidiary, not bro-sister (in your 2 hypotheticals). But they aren't.

I agree with Belgarath that ASG rules are too fact specific and detailed to attempt a guess (which is all that it would be, really).

[Guest Rider]

I agree, With no ASG issues then clearly isn't a controlled group because of the 80% rule. In this case the actual ownership across both companies is 51%