RTD Financial Advisors
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Farmer & Betts, Inc.
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Plumbers Local Union No. 1 Benefit Funds
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Pentegra
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Retirement Plan Administrator (TPA) Retirement Plan Consultants
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Administrator/Consultant (DC and DB) TPA Professionals
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Retirement Plan Relationship Manager ERISA Services, Inc.
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Retirement, LLC
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EPIC: TPA/DPS
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Retirement, LLC
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Kentucky Trust Company
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EPIC Retirement Plan Services
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Retirement Plan Documents Specialist Loren D. Stark Company
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Bates & Company
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Retirement Plan Legal Specialist Pentegra
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Jr Retirement Plan Administrator/ Administrative Assistant Hochheiser Deutsch & Co, Inc.
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Trucker Huss, A Professional Corporation
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Nicholas Pension Consultants
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Employee Benefits & Executive Compensation Associate Attorney Polsinelli PC
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Carpenter Morse Group
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Employee Benefits and Executive Compensation Associate Attorney Verrill
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Question 15: If a father owns 100% of one corporation and the son owns 100% of another corporation, are they considered a controlled group? I think the answer is yes from IRC 318, but someone else thought that because the son is over 21 that the answer is no. |
Answer: If you had money riding on this one, pay up!
So, suppose I own 75% of company A and my adult son owns the remaining 25%. I am deemed to own my son's stock for controlled group purposes (because I already have more than 50%), but he is not deemed to own my stock (because he does not already have a majority of the company). For affiliated service group purposes, we are both deemed to own 100% of the other's business. Going to the facts of your case, since neither owns any interest in the other's business, neither is deemed to own the other's stock. So there are no shareholders in common between the two businesses and a controlled group does not exist. Just to make things a little more confusing, there is a third set of attribution rules that are used in dealing with leased employees under 414(n) and management function groups under 414(m)(5). These are the related party rules under IRC 267. Incidentally, those handle parent child attribution in the same manner as IRC 318. Because these rules are so important, I discuss each set in a separate chapter of my book Who's the Employer? Controlled group attribution: Chapter 7 Affiliated service group attribution: Chapter 14 Related party rules: Chapter 17 Q 14:16 of the book has a table contrasting controlled group attribution and ASG attribution. |
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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