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%