Question 115: Suppose a husband and wife own separate medical practices. My understanding is that if the husband owns 100% of the stock in corporation A and his wife owns 100% of stock in corporation B, all employees have to be aggregated. Would they be better off as sole proprietors, as partners in a new partnership, or as members of a new LLC?
Answer: No. There are two key issues raised by your question.

Controlled group or common control. It is true that the controlled group rules of IRC 414(b) apply only to corporations. However, the common control rules of 414(c), which are essentially identical, apply to all types of entities. For purposes of whether the employees must be aggregated, the form of the entities is irrelevant.

Attribution through marriage. Depending on circumstances, the two entities might or might not need to be aggregated. Take a look at Q&A 111 (click) of this column for a roadmap.

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