Am I controlled group?

[Jakyasar]

Being paranoid here late at night.

Joe owns ABC corp 100%

One of the ABC employees is Joe's adult son, Harry in addition to many other employees.

Joe and Harry started a partnership (LLC) in 2023 50/50 - no employees.

LLC has nothing to do with ABC corp, no business transactions, no income exchange, no nothing.

Do they have controlled group issues as they want to set up a DB plan for the LLC?

[Bill Presson]

Controlled group attribution falls under Section 1563. For that an adult child’s interest is attributed to the parent only if the parent owns MORE than 50%. Same issue in reverse. 
 

So they need to be careful that the dad never add any ownership.

[Jakyasar]

Hi Bill

Good to hear from you.

Thank you for your input. Agree that dad's partnership ownership never exceeds 50%.

[CuseFan]

Also, be careful of this. If dad has any exercisable option on stock owned by son he is deemed to own that as well.

(e)Constructive ownership

(1)Options

If any person has an option to acquire stock, such stock shall be considered as owned by such person. For purposes of this paragraph, an option to acquire such an option, and each one of a series of such options, shall be considered as an option to acquire such stock.

[Jakyasar]

Oh yeah, will make sure none of that, thank you for your input