Answer: Absolutely, yes, and I like your choice of reading material!
This is frequently confused, and represents one of the major differences between the controlled group attribution system and the affiliated service group attribution system.
Controlled group. My lady wife and I have two sons, Derrill (22), and Steve (18). For controlled group purposes, I am deemed to own everything Steve owns, and he is deemed to own everything I or my wife own. This will be true until his 21st birthday.
Derrill has already passed that 21st birthday, so he is handled differently. I am deemed to own stock he holds if, and only if, I already own (or am deemed to own) more than 50% of the company in question. By the same token, Derrill is deemed to own stock I hold if, and only if, Derrill owns (or is deemed to own) more than 50% of the company in question. Stock cannot be attributed under this family rule from Steve to me to Derrill.
Let's take a quick example. Consider corporation X. Steve owns 20%, I own 30%, and Derrill owns 50%. I am deemed to own Steve's stock, which means I am deemed to own 50% of X. 50% is not more than 50%, so I am not deemed to own any of Derrill's stock, nor is he deemed to own any of mine.
Now let's move to corporation Y. Steve owns 51% and Derrill owns 49%. I am deemed to own Steve's 51%. That gives me more than 50% of Y, so I am deemed to own Derrill's stock, giving me 100% of Y. Derrill, on the other hand, does not own more than 50% of Y, so he holds his 49% and nothing more.
Finally, Derrill and I both have sole proprietorships. My sole proprietorship is under common control with Corporation Y. X and Y are in a controlled group. Derrill's sole proprietorship is not under common control with any of the other three businesses.
Incidentally, controlled group attribution between grandparent and grandchild is the same as between parent and adult child, regardless of the age of the grandchild.
Affiliated Service Group. For affiliated service group purposes, there is always attribution between parent and child, regardless of the age of the child. There is also attribution from grandchild to grandparent (but not the other way around).
So suppose Derrill abandons his budding career in economics and decides to practice law. We both have our sole proprietorships, and his regularly performs services for mine. All the elements of an A-Org type affiliated service group are present. Specifically, Derrill is deemed to own 100% of my business for affiliated service group purposes, and so his sole proprietorship is deemed to be an owner of my business.
These attribution rules are discussed in more detail in Chapters 7 and 14 of my book, Who's the Employer?. At Appendix D in the book's second edition is a handy table comparing the various attribution systems, including the related party rules used for IRC 414(m)(5).