SEP affiliated service groups
Hello. I have a client with an SEP IRA. He has 2 law partners who do business together in name only. They have three separate companies and they dba the firm name. They work quite separately and “eat their own cooking.” Not one of them has any ownership in the either of the other two companies. Do they pass the affiliated service group test (i.e. they are not considered employees of my client’s firm)?
Permalink Submitted by Alan - IRA critic on Wed, 2016-07-27 17:52
Not clear about your referring to them as partners when it sounds like they are not?. If there is no common ownership or control, other than possibly a licensing arrangement for use of the dba, and there is no cooperation regarding a client of any of them, the ASG rules should not apply. I don’t think any fees for licensing the use of the dba would create an ASG.
Permalink Submitted by Eric Houssels on Wed, 2016-07-27 18:13
Thank you for the reply.
Permalink Submitted by Eric Houssels on Wed, 2016-07-27 18:15
My client says that occassionally they will help each other with particular matters and bill each accordingly. Does this constitute “cooperation regarding a client”? Does this occassional working together make them an affiliated service group?
Permalink Submitted by Alan - IRA critic on Wed, 2016-07-27 18:32
Not sure. This is a tremendously complex area with some gray areas. This IRS worksheet may help them determine whether or not they are subject or not. https://www.irs.gov/pub/irs-pdf/p7005.pdf
Permalink Submitted by Eric Houssels on Wed, 2016-07-27 19:07
Thanks for this link