Legal Question in Tax Law in California
Affiliated Service Group
Owner of construction company has 15 employees and a defined benefit plan. Construction Co. does residential building/remodeling. Owner has opportunity to start new business for management of vacant, wooded land for others and managing leasing of land for agriculture. Owner would start new company, needing 2-4 employees, and would set up medical and retirement plans for new employees. Benefits advisor advises that IRS would make new employees part of defined benefit plan as both companies provide services and an ''affiliated service group'' is treated as one employer. This can't be true. Is it? Otherwise how can an owner go into other businesses?
1 Answer from Attorneys
Re: Affiliated Service Group
Your benefits advisor is substantially correct.
SEE: http://www.irs.gov/pub/irs-tege/epchd704.pdf
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