Choice of Entity Corner: bona fide reciprocal purchase arrangements under the Code Sec. 414 common control rules

In forming new business entities, as well as restructuring existing ones, whether or not two or more such entities should be grouped together for tax purposes comes up much more often now that the Patient Protection and Affordable Care Act (the Affordable Care Act) has mostly gone into effect. These...

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Bibliographic Details
Published in:Journal of Passthrough Entities 2015-11, Vol.18 (6), p.9
Main Authors: Nichols, Thomas J, DeCleene, James W
Format: Article
Language:English
Subjects:
Agreements
Clauses
Closely held corporations
Commercial law
Consolidation
Employees
Employers
Employment
Incorporation
Principles
Stockholders
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Summary:In forming new business entities, as well as restructuring existing ones, whether or not two or more such entities should be grouped together for tax purposes comes up much more often now that the Patient Protection and Affordable Care Act (the Affordable Care Act) has mostly gone into effect. These grouping rules can be critical for purposes of determining whether any or all of such entities constitute an applicable large employer required to provide minimum essential coverage to its employees. Probably the most expansive of these grouping rules is the one contained in Code Sec. 414(c) (the 414(c) common control rules), which simply provides that under regulations prescribed by the Secretary, all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer, and that such regulations shall be based on principles similar to the principles which apply in the case of subsection (b).
ISSN:1099-7407