Controlled Group - Family Attribution

[commishvp]

Company A - is owned 50% by Mom and 50% by Dad.

Company B - is owned 25% each, by Mom, Dad, Son 1 and Son 2 . . . both sons are well over 21.

Is this a controlled group? It seems to me the answer is no since the parent is deemed to own the child's shares only if parents own over 50%. In company B the parents own exactly 50%.

However, it doesn't feel quite right as seems like a good plan design to get more contributions into the owners accounts.

Thanks for any input.

[Belgarath]

On the surface, I agree this isn't a controlled group. But make sure you explore other issues - is this potentially an affiliated service group, which used different (IRC 318) attribution rules? Even on the basic ownership level of stock ownership - ownership can be based on either voting power or stock ownership, and you also have to consider stock value, so if you have different share classes, be careful. Are there stock options? This could create additional attribution. A wonderful minefield.

Clients rarely give all the information necessary to make these determinations, so they should run this by legal counsel if there is any doubt. Of course, when you tell them to, they rarely do...