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Question 114: A father owns 100% of 3 companies that constitute a controlled group. He has 2 adult sons who together own more than 80% of 2 other companies they recently purchased; that's a separate controlled group. The father does not own any interest in the 2 new companies but he co-signed with the sons for their purchase. Does the fact that the father co-signed attribute ownership to him, such that all 5 companies now are part of the same controlled group? Would it depend on what the purchase agreement says? |
Answer: You sound like you have a good familiarity with the rules. You are correct that there is no attribution between the father and the adult sons in this situation, absent something unusual in the purchase agreement for the 2 new companies. And it would have to be pretty unusual. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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