Controlled Group question

[Tom]

Realtor is 50% owner in a real estate business with a 50% partner (not related).  Realtor's spouse owns a business 100% - a salon.  No services are performed for each other's businesses.  The Realtor and his spouse have minor children so they are deemed to own the interest in each others' business.  But to be a controlled group they need GREATER than 50% common ownership to EFFECTIVE control I believe from what I'm reading.  Would you agree?

Thank you!

[Belgarath]

Agree, but it doesn't matter anyway. You need to have at least 80% for the "controlling interest" test, and you don't have that. The controlling interest test is where the same 5 or fewer people have ownership that equals or exceeds 80% of both corporations – and they must own at least some stock in each corporation to be considered.

[Tom]

Oh you're right - I was overly focused on the effective interest part of the test.

[MWeddell]

You might also be remembering the "greater than 50%" rule for aggregating DC plans for 415 limits.  For all of the other testing rules, the 80% common ownership (or a brother-sister controlled group) rule applies.

[Tom]

Good point.  Thank you