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Question 55: Are rights of first refusal considered "options" for controlled group purposes? If not, do they have any affect on determining controlled group status? | |
Answer: The following is an excerpt from Chapter 7 of my book, Who's the Employer?:
So, if a right of first refusal is not an option, does it have an effect? It can. An right of first refusal is a restriction on transfer. Under the right conditions, that can cause the stock to be excluded under IRC §1563(c)(2)(B)(ii). This is also a complex issue and is discussed in Q 8:7-8:9 of Who's the Employer?. The bottom line is that if the stock can be ignored in determining if a controlled group exists if:
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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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