I seem to recall that there is an exception to the general attribution rules that would not consider the following situatiuon to result in the finding that a controlled group existed. Of course, I can not locate the exception.

Wife is a dentist and owns 100% of the stock in a professional dental corporation. The professional dental corporation has 10 NHCEs. Husband has nothing to do with this professional dental corporation. He is not on the board of directors, is not an officer and is not employed by the professional dental corporation.

Husband owns 100% of the stock in a company that maintain a retirement plan. Does he need to include the employees of his wife's professional dental corporation in determinng if his retirement plan satifies coverage requirements?

Thanks in advance for your thoughts.

Ed

The exception to the spousal attribution rule can be found in Code Section 1563(e)(5).

From your description it appears they meet the exception and would not be considered a controlled group. However, you should review two issues. First, whether the couple live in a community property state, which would nullifying the exception. Second, whether the couple have a minor child. Due to attribution rules a minor child is considered to own any stock held by the parents. So this would make the companies a controlled group. Although there is some debate about the validity of this rule.

You should also confirm that the companies are not an affiliated service group.