3 Small Businesses

A client has 3 small  businesses... 

1.  Lawn Service
2.  Professional power sweeping company
3.  Investment properties

While they sound like they would all be using each other's services I am told they do not at all.  

Businesses #1 and #2 each have 1 employee + himself.... #3 is just him.  

Can he open a solo 401(k) plan for business #3 and not worry about the other 2?  Or are we dealing with a control group?  I recall reading another thread where the situation was similar but the other businesses were owned by a spouse therefore there wasn't a control group.   He makes lots more money investing in real estate than the other 2 businesses combined.

Thank you

He owns all 3 100% correct? Controlled Group.

I agree with Lou that it is a controlled group if the same individual owns 100% of all three businesses.

The question about using each others' services is only relevant when you are considering whether an affiliated service group exists. In order to have an affiliated service group, at least one of the businesses has to be a service organization, which means either it is in one of certain specified fields (law, health, etc.) or capital is not a material income-producing factor. None of those businesses are likely to be service orgs, since none of them are in any of the specified fields, and it appears that capital would be a material income-producing factor for each of them.

I thought since they were not related in their business activities and didn't use the other's services they wouldn't be a control group.  

Would it be a control group of all 3 if one of the businesses was owned by a spouse? Or would it be a control group of just 2 of the businesses and the wife would be on her own?

Thank you, I appreciate it. 

A controlled group is based on ownership. There doesn't need to be any relationship in the business activities.  Example, I own 100% of A and B. It doesn't matter that A manufactures firearms, and B is a clown service that plays at Birthday parties. 

As to your other questions, you have ownership attribution between spouses, and you would have a controlled group. There is such a thing as the "spousal noninvolvement" clause under IRC 1563(e)(5) and the regulations thereunder - if you can satisfy all those requirements, then not a controlled group. But watch out for community property states.