Subscribe (Free) to
Daily or Weekly Newsletters
Post a Job

Featured Jobs

Senior Retirement Account Representative

Ohio Pension Services
(Akron OH)

Ohio Pension Services logo

Director, Business Development

National Benefit Services, LLC
(Remote / West Jordan UT)

National Benefit Services, LLC logo

Pension Plan Administrator

DeMars Pension Consulting Services, Inc.
(Overland Park KS)

DeMars Pension Consulting Services, Inc. logo

Sr. Benefits Plan Administrator

The Catholic Diocese of Arlington
(Arlington VA)

The Catholic Diocese of Arlington logo

Retirement Plan Administrator

Premier Plan Consultants
(Remote / San Diego CA)

Premier Plan Consultants logo

Retirement Plan Consultant

The MandMarblestone Group, llc
(Remote / Philadelphia PA)

The MandMarblestone Group, llc logo

DC Plan Administrator

Farmer & Betts, Inc.
(Remote / Tacoma WA / CO / OR)

Farmer & Betts, Inc. logo

Strategic Relationship Manager

401K Generation, Inc.
(Altamonte Springs FL)

401K Generation, Inc. logo

Senior Retirement Plan Administrator

TPS Group
(Remote / Buffalo NY)

TPS Group logo

Retirement Plan Administrator +

Steidle Pension Solutions
(Remote / NJ / PA)

Steidle Pension Solutions logo

Retirement Plan Consultant

DWC - The 401(k) Experts
(Remote)

DWC - The 401(k) Experts logo

Free Newsletters

“BenefitsLink continues to be the most valuable resource we have at the firm.”

-- An attorney subscriber

Mobile App image LinkedIn icon
Twitter icon
Facebook icon

BenefitsLink > Q&A Columns >

Who's the Employer?

Answers are provided by S. Derrin Watson, JD, APM

Parent-Subsidiary Groups

(Posted July 14, 1999)

Question 28: If a parent corporation has 4 wholly-owned subsidiaries, and together the 4 subs each own 25% of a new sub, are the employees of the new sub considered to be employees of the parent corporation?

Answer: Yes. The parent and all 5 subs are a single parent-subsidiary controlled group.

The formal definition of a parent-subsidiary group in IRC 1563(a)(1) says that 80% of each sub in the group must be owned by "one or more of the other corporations" in the group. Because 100% of the new sub is owned by other subsidiaries, it is part of the controlled group, even though the parent doesn't own a single share directly.

As part of the controlled group, all employees of all 6 corporations are deemed to be employed by a single employer.

For more on parent-subsidiary groups, see chapter 6 of my book Who's the Employer?


Important notice:

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.


Copyright 1999-2017 S. Derrin Watson
Related links:

(restricted access)

(restricted access)

© 2021 BenefitsLink.com, Inc.