Business Planning
Controlled Group
Corporations are a controlled group if all corporations are owned at least 80% by a parent corporation (26 U.S.C. § 1563(a)(1)) or if pairs of two corporations are owned more than 50% by the same 5 or fewer people, but only including stock the extent identical between the corporations. (If Jim owns 10% of X and 40% of Y, only count 10%.)
Problem 3-G
| X Corp | Y Corp | Z Corp | |
|---|---|---|---|
| Jim | 10% | 40% | 30% |
| Linda | 80% | 50% | 25% |
| Sam | 10% | 55% | 45% |
- X & Y: 10% + 5% + 10% = 25%
- X & Z: 10% + 25% + 10% = 45%
- Y & Z: 30% + 5% + 45% = 80%