Support Center > Knowledge base> Article: Control Group

Control Group

Article ID: 63079 Email Print
Question
What is a Control Group?

Answer

A Control Group can be defined in one of the following ways:

  • Parent-subsidiary group
    • A parent-subsidiary group is one or more chains of corporations connected through stock ownership with a common parent corporation if:
      • Stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is directly or indirectly owned by one or more of the other corporations; and
      • The common parent corporation directly or indirectly owns stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of shares of all classes of stock of at least one of the other corporations, excluding, in computing such voting power or value, stock owned directly by such other corporations.
    • For purposes of determining whether a corporation is a member of a parent-subsidiary controlled group of corporations within the meaning of section 1563(a)(1), stock owned by a corporation means:
      • Stock owned directly by the corporation, and
      • Stock constructively owned by that corporation under sections 1563(e)(1), (2), and (3).
  • Brother-sister group.
    • A brother-sister group generally is two or more corporations where the same five or fewer persons who are individuals, estates, or trusts directly or indirectly own stock possessing:
      • At least 80% of the total combined voting power of all classes of stock entitled to vote or at least 80% of the total value of shares of all classes of the stock of each corporation (the 80% test), and
      • More than 50% of the total combined voting power of all classes of stock entitled to vote or more than 50% of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such person only to the extent such stock ownership is identical with respect to each such corporation (the 50% test).
    • Brother-sister group for purposes of certain tax attributes. For purposes of allocating the following, a brother-sister group is defined using only the 50% test above:
      • The taxable income brackets,
      • The additional taxes,
      • The alternative minimum tax (AMT) exemption amount,
      • The reduction of the AMT exemption amount, and
      • The accumulated earnings credit.
      • For purposes of determining whether a corporation is a member of a brother-sister controlled group of corporations within the meaning of section 1563(a)(2), stock owned by a person who is an individual, estate, or trust includes:
        • Stock owned directly by such person, and
        • Stock constructively owned under section 1563(e).
  • Combined group.
    • A combined controlled group is three or more corporations each of which is a member of either a parent-subsidiary group or a brother-sister group, and at least one of which is both the common parent of a parent-subsidiary group and also a member of a brother-sister group
  • For additional information please speak with your accountant or review the following IRS information

related articles

Article Details
Views: 939 Created on: Mar 06, 2015
Date updated: Sep 29, 2015
Posted in: Resource

Poor Outstanding