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Chapter 7 Controlled and Affiliated Service Groups

Chapter 7- Controlled and Affiliated Service Groups Page 7-1 Controlled and Affiliated Service Groups Chapter 7 Controlled and Affiliated Service Groups By Larry Lawson (Cincinnati) Reviewer: Jeff Nelson (Cincinnati) INTERNAL REVENUE Service TAX EXEMPT AND GOVERNMENT ENTITIES Overview Introduction The Internal Revenue Code established its Controlled Groups Provisions as part of the Revenue Act of 1964. They were initially issued as part of a tax reform package intended to encourage small businesses, which operated in the corporate form. Over time some medium and large businesses began taking advantage of the lower tax rates afforded small businesses by organizing their structure into multiple corporate forms.

all members of the controlled group. In this example, the four shareholders together own 80% or more of the stock of each corporation, the first test is met, since the shareholders own 100% percent of the stock. Continued on next page . Chapter 7- Controlled and affiliated service groups

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