CONTROLLED/AFFILIATED GROUP

[Cynchbeast]

Facts:

Three business entities:

Company A, LLC, : Ambulatory Surgical Center (owned 50% /50% by Companies A & B)

Company B, a C-Corp: Professional Medical Corporation (owned 100% by Dr. Smith)

Company C, an S-Corp: Management Corporation (owned 100% by John and Mary - h/w)

QUESTION: Can a qualified pension or profit sharing plan be adopted strictly for the company C (Management Corporation)?

[ETA Consulting LLC]

Company A, LLC, : Ambulatory Surgical Center (owned 50% /50% by Companies A & B)

Company A owns 50% of Company A? Need detail Who Owns the Company A that owns 50% of Company A?

Company B, a C-Corp: Professional Medical Corporation (owned 100% by Dr. Smith)

Does Dr. Smith have a first name? Is he a direct owner of any portion of Company A or Company C? Is he related to any of the owners of Company A or Company C?

Company C, an S-Corp: Management Corporation (owned 100% by John and Mary - h/w)

Who is direct owner, is it 50 - 50?

QUESTION: Can a qualified pension or profit sharing plan be adopted strictly for the company C (Management Corporation)?

Need more detail.

Good Luck!

[Cynchbeast]

1. Company A is owned 50% by Company C and 50% by company B ( sorry for the typo in the original question)

2. Dr. Smith (don t know his first name...) is not related to any of the company's A or company C owners

3.Company C is owned 50% by husband and 50% by wife

Also note that Dr. Smith 100% owner of company B) is also an employee and receives W2 income) of company A

Please let me know if any questions

[ETA Consulting LLC]

They are "likely" to meet the affiliated service group rules under 414(m) of the Internal Revenue Code. As for a Controlled Group, there doesn't appear to be any overlapping ownership outside of Dr. Smith's 100% and 50%. This may easily change when you attribute ownership under the IRC Section 1563 Rules. For instance, if the other owner of Company A has a "right to first refusal" requiring him to sell his ownership to Dr. Smith should he ever decide to sell, then this would equate to Dr. Smith owning 100% of both companies. Here is where you'd likely have to pay someone to ask all the questions that need to be asked, but on the surface they are not a controlled group.

An affiliated service group deals with a different set of rules. You already have a shared HCE for both companies. If once receives a significant portion of income by providing services to the other (or the other's clients), then you could easily have an affiliated service group.

The details; questions you must answer in order to perform the analysis, may seem somewhat endless. The IRS does actually performs the affiliated service group analysis should you submit a filing to them making that request.

Good Luck!

[Mark Whitelaw]

Are John and / or Mary healthy? Is their need a current tax deduction or a tax-free future value? If future value, healthy HCE Class individuals have been able to access greater lifelong value since 2002 outside a tax-qualified benefit plan on a direct, participant defined contribution capacity basis. Think of it as an uncapped Roth complement third-party sponsored and administered plan for healthy HCE Class individuals with access to institutional asset pricing you can't get in a tax qualified plan or retail personal financial planning.