Any controlled group issues?

Hi

Joe and Mary are spouses and have no children under age 21. They do not live in a community state.

Company A is owned 100% by Joe and has employees. No pension plans.

Company B is owned 50/50 by Joe and Mary but Mary is not an employee. There are no other employees, just Joe. No pension plans

Company C is owned 100% by Mary and Mary is the only employee. A DB plan is in effect covering Mary only.

None of these companies interact with each other and they all do different lines of work.

What issues are there?

Thank you

Do any of the entities receive more than 50% of their gross income from passive investments?  A&B(Joe) and B&C(Mary) may be controlled groups through the respective attribution of B, I would make sure the EA is aware of this for Mary's DB.

And have you ruled out affiliated service groups?  There are no exceptions to spousal attribution under IRC 318.

I think you do have control group issues. The way I understand it, you have 3 controlled groups, since the exception to spousal attribution will not apply to Company B:

1. B with A and C
2. A with B
3. C with B

For Company C to have a pension plan, Joe has to be in the plan.

Nate, no affiliation whatsoever, as I was told. All 3 do different work and serve different clients.

On 2/22/2022 at 2:59 PM, Calavera said:

I think you do have control group issues. The way I understand it, you have 3 controlled groups, since the exception to spousal attribution will not apply to Company B:

1. B with A and C
2. A with B
3. C with B

For Company C to have a pension plan, Joe has to be in the plan.

I agree that Joe likely needs to benefit because of the B&C group, which is why he needs to notify the EA for (a)(26) purposes.

However I don't see an A&B&C group because if the spousal exception holds then Joe is 0% in C and Mary is 0% in A.

20 hours ago, Jakyasar said:

Nate, no affiliation whatsoever, as I was told. All 3 do different work and serve different clients.

What are the 3 lines of business?  Do either hold any designations or advanced degrees used in those businesses?  What are the corporate entities and what are the taxable entities?