Controlled Group

[jpod]

Are Corporations A and B a controlled group or under common control under 414(b) or ©?

A has voting and non-voting stock. Two brothers each owns 1% of the total value of all stock and each owns 50% of the total voting power of all stock. Their four adult sons each owns 24.5% of the total value of all stock. (Adult meaning over age 21.)

B has voting and non-voting stock. The two brothers each owns 39% of the total value of all stock and each owns 39% of the total voting power of all stock. Their four adult sons each owns 5.5% of the total value and total voting power of all stock.

[ETA Consulting LLC]

Your fact pattern is too convoluted. If you list Company A and its owners by percentage (and the owners relatives), and then list Company B and its owners by percentage; it would be much easier. Total combined ownership for more than one person confuses the issue as those amounts can be calculated from the inital lists.

Good Luck!

[jpod]

Ok.

Corp. A

Brother 1 1% value 50% voting

Brother 2 same

Son 1 24.5% value 0% voting

Son 2 same

Son 3 same

Son 4 same

Corp. B

Brother 1 39% value 39% voting

Brother 2 same

Son 1 5.5% value 5.5% voting

Son 2 same

Son 3 same

Son 4 same

[ETA Consulting LLC]

Ok.

Corp. A

Brother 1 1% value 50% voting

Brother 2 same

Son 1 24.5% value 0% voting

Son 2 same

Son 3 same

Son 4 same

Corp. B

Brother 1 39% value 39% voting

Brother 2 same

Son 1 5.5% value 5.5% voting

Son 2 same

Son 3 same

Son 4 same

We know the voting stock is 100% and 78%; which is not a controlled group.

We also know that the value stock is limited to 5 or fewer members, so you cannot get a combined 80% using any combination of 5 individuals.

Barring some other attribution provisions (i.e. restrictions on stock in favor of a parent or sibling), then they are not a controlled group.

Good Luck!