Chapter 3 - Controlled Groups and Affiliated Service Groups

Question 1 of 19

1

A parent-subsidiary controlled group exists if the companies are connected through at least 50 percent stock ownership.

Select one of the following:

True
False

Explanation

Question 2 of 19

1

A brother-sister controlled group exists if either the common ownership or the effective control test is satisfied.

Select one of the following:

True
False

Explanation

Question 3 of 19

1

Attribution between spouses does not apply if the couple is childless.

Select one of the following:

True
False

Explanation

Question 4 of 19

1

Attribution from a parent to a minor child applies only if the parent owns more than 50 percent of the business.

Select one of the following:

True
False

Explanation

Question 5 of 19

1

Company A and Company B are a controlled group. The workforces of both companies are considered when testing each company’s plan for coverage requirements.

Select one of the following:

True
False

Explanation

Question 6 of 19

1

A financial institution is considered a service organization because it provides a service of lending money.

Select one of the following:

True
False

Explanation

Question 7 of 19

1

In order for an A-Org group to exist, the A-Organization must have at least a 10 percent ownership interest in the FSO.

Select one of the following:

True
False

Explanation

Question 8 of 19

1

If an FSO is a corporation, it always must be a professional service corporation for affiliated service group rules.

Select one of the following:

True
False

Explanation

Question 9 of 19

1

If two or more entities are deemed to be an affiliated service group, they do not need to be tested together for top-heavy purposes as long as each is not top-heavy on its own.

Select one of the following:

True
False

Explanation

Question 10 of 19

1

If two or more entities are deemed to be an affiliated service group and each entity sponsors its own plan, each plan must pass coverage.

Select one of the following:

True
False

Explanation

Question 11 of 19

1

For purposes of determining any type of affiliated service group, ownership is attributed from a grandchild to a grandparent, but not from a grandparent to a grandchild.

Select one of the following:

True
False

Explanation

Question 12 of 19

1

Based on the following information, determine brother-sister controlled group status:
• The individuals listed are not related.

Select one of the following:

A. None
B. W and X only
C. W and Y only
D. X and Y only
E. W and X, X and Y only

Explanation

Question 13 of 19

1

All of the following conditions are necessary to avoid spousal attribution for controlled group purposes, EXCEPT:

Select one of the following:

A. The spouse must not have any direct ownership in the business.
B. The spouse must not be a director or employee of the business.
C. The spouse must not participate in the management of the business.
D. The spouse must not inherit the business upon death of the business owner.
E. No more than 50 percent of the business’ gross income may be derived from passive investments.

Explanation

Question 14 of 19

1

All of the following statements regarding attribution for controlled group purposes are TRUE, EXCEPT:

Select one of the following:

A. Ownership is attributed from husband to wife unless the business is wholly owned by the husband and certain requirements are met.
B. Ownership is attributed from a minor child to a parent.
C. Ownership is attributed from an adult child to a parent if the parent owns more than 50 percent of the corporation.
D. Ownership is attributed from a grandparent to a grandchild if the grandchild owns more than 50 percent of the corporation.
E. Ownership is attributed from a father-in-law to a son-in-law.

Explanation

Question 15 of 19

1

All of the following IRC sections consider controlled group members as a single employer, EXCEPT:

Select one of the following:

A. Eligibility and coverage (IRC §410)
B. Deduction (IRC §404)
C. Top-heavy (IRC §416)
D. Vesting (IRC §411)
E. Annual additions (IRC §415)

Explanation

Question 16 of 19

1

All of the following statements regarding affiliated service groups are TRUE, EXCEPT:

Select one of the following:

A. An FSO can be part of both an A-Org group and a B-Org group.
B. An FSO of an A-Org group must be a professional service organization.
C. An A-Organization must be a service organization.
D. A B-Organization need not be a service organization.
E. An A-Organization must have some ownership in the FSO.

Explanation

Question 17 of 19

1

All of the following are effects of being an affiliated service group, EXCEPT:

Select one of the following:

A. An employee’s service with all group members is credited when determining plan eligibility.
B. Plans must satisfy coverage requirements considering all employees in the affiliated service group.
C. HCE status is determined by looking at the ownership in each entity separately.
D. Annual additions for all plans in the group are aggregated to determine if the IRC §415 limits have been exceeded.
E. An employee’s service with all group members is credited when determining
vesting percentages.

Explanation

Question 18 of 19

1

All of the following statements regarding attribution in determining affiliated service groups are TRUE, EXCEPT:

Select one of the following:

A. Ownership interest is attributed between spouses.
B. Ownership interest is attributed from parent to adult child only if the parent owns more than 50 percent of the company.
C. Ownership interest is not attributed between siblings.
D. Ownership interest is attributed from grandchild to grandparent.
E. Ownership interest is not attributed from grandparent to grandchild.

Explanation

Question 19 of 19

1

All of the following activities would be considered management functions, EXCEPT:

Select one of the following:

A. Supervisory roles
B. Hiring employees
C. Investing 401(k) plan assets
D. Setting employee compensation
E. Business planning

	Created by Justin Guy (just about 9 years ago

DC3 DC3 Quiz on Chapter 3 - Controlled Groups and Affiliated Service Groups, created by Justin Guy (just on 21/10/2015.

Chapter 3 - Controlled Groups and Affiliated Service Groups

Chapter 3 - Controlled Groups and Affiliated Service Groups

Question 1 of 19

A parent-subsidiary controlled group exists if the companies are connected through at least 50 percent stock ownership.

Select one of the following:

Explanation

Question 2 of 19

A brother-sister controlled group exists if either the common ownership or the effective control test is satisfied.

Select one of the following:

Explanation

Question 3 of 19

Attribution between spouses does not apply if the couple is childless.

Select one of the following:

Explanation

Question 4 of 19

Attribution from a parent to a minor child applies only if the parent owns more than 50 percent of the business.

Select one of the following:

Explanation

Question 5 of 19

Company A and Company B are a controlled group. The workforces of both companies are considered when testing each company’s plan for coverage requirements.

Select one of the following:

Explanation

Question 6 of 19

A financial institution is considered a service organization because it provides a service of lending money.

Select one of the following:

Explanation

Question 7 of 19

In order for an A-Org group to exist, the A-Organization must have at least a 10 percent ownership interest in the FSO.

Select one of the following:

Explanation

Question 8 of 19

If an FSO is a corporation, it always must be a professional service corporation for affiliated service group rules.

Select one of the following:

Explanation

Question 9 of 19

If two or more entities are deemed to be an affiliated service group, they do not need to be tested together for top-heavy purposes as long as each is not top-heavy on its own.

Select one of the following:

Explanation

Question 10 of 19

If two or more entities are deemed to be an affiliated service group and each entity sponsors its own plan, each plan must pass coverage.

Select one of the following:

Explanation

Question 11 of 19

For purposes of determining any type of affiliated service group, ownership is attributed from a grandchild to a grandparent, but not from a grandparent to a grandchild.

Select one of the following:

Explanation

Question 12 of 19

Based on the following information, determine brother-sister controlled group status: • The individuals listed are not related.

Select one of the following:

Explanation

Question 13 of 19

All of the following conditions are necessary to avoid spousal attribution for controlled group purposes, EXCEPT:

Select one of the following:

Explanation

Question 14 of 19

All of the following statements regarding attribution for controlled group purposes are TRUE, EXCEPT:

Select one of the following:

Explanation

Question 15 of 19

All of the following IRC sections consider controlled group members as a single employer, EXCEPT:

Select one of the following:

Explanation

Question 16 of 19

All of the following statements regarding affiliated service groups are TRUE, EXCEPT:

Select one of the following:

Explanation

Question 17 of 19

All of the following are effects of being an affiliated service group, EXCEPT:

Select one of the following:

Explanation

Question 18 of 19

All of the following statements regarding attribution in determining affiliated service groups are TRUE, EXCEPT:

Select one of the following:

Explanation

Question 19 of 19

All of the following activities would be considered management functions, EXCEPT:

Select one of the following:

Explanation

Based on the following information, determine brother-sister controlled group status:
• The individuals listed are not related.