409(p) Testing and Related Entities

[ERISA-Bubs]

I posted this once before without luck. I'm hoping someone can help me on this because I appear to be stuck.

The 409(p) regulations define "related entity" as:

"any entity in which the S corporation holds an interest and which is a partnership, a trust, an eligible entity that is disregarded as an entity that is separate from its owner under § 301.7701-3 of this chapter, or a qualified subchapter S subsidiary under section 1361(b)(3)."

Is a subsidiary of a subsidiary considered a "related entity"? For example, the S Corporation owns Subsidiary A and Subsidiary A owns Subsidiary B. Is Sub B a "related entity" to the S Corporation?

I appreciate any help / thoughts / answers anyone can provide. Thank you!