West Virginia Code of State Rules › Agency 110 - Tax › Title 110 - LEGISLATIVE RULE STATE TAX DEPARTMENT › Series 110-13C - Business Investment And Jobs Expansion Tax Credit, Corporation Headquarters Relocation Tax Credit, Sma › Section 110-13C-15 - Definition of controlled group of corporations

Current through Register Vol. XLI, No. 28, July 12, 2024
15.1. In general. - For purposes of W. Va.
				Code '11-13C-14
				and the regulations thereunder, the term "controlled group of corporations"
				means any group of corporations which is either a "parent-subsidiary controlled
				group" (as defined in paragraph 15.2), a "brother- sister controlled group" (as
				defined in paragraph 15.3), or a "combined group" (as defined in paragraph
				15.4). For the exclusion of certain stock for purposes of applying these
				definitions, see Section 15A of these regulations.
15.2. Parent-subsidiary controlled group. -
				The term "parent-subsidiary controlled group" means one or more chains of
				corporations connected through stock ownership with a common parent corporation
				if stock possessing at least fifty percent (50%) of the combined voting power
				of all classes of stock entitled to vote or at least fifty percent (50%) of the
				total value of shares of all classes of stock of each corporation (except the
				stock of the common parent corporation) is owned (directly or indirectly) by
				one or more of the other corporations; and the common parent corporation owns
				(directly or indirectly) stock possessing at least fifty percent (50%) of the
				total combined voting power of all classes of stock entitled to vote or at
				least fifty percent (50%) of the total value of shares of all classes of stock
				of at least one of the other corporations (excluding, in computing such voting
				power or value, stock owned directly by such other corporations). This
				definition of a parent-subsidiary controlled group of corporations is
				illustrated by the following examples:
Example (1). P Corporation owns stock possessing fifty
				  percent (50%) of the total combined voting power of all classes of stock
				  entitled to vote of S Corporation. P is the common parent of a
				  parent-subsidiary controlled group consisting of member corporations P and
				  S.
Example (2). Assume the same facts as in example (1). Assume
				  further that S owns stock possessing fifty percent (50%) of the total value of
				  shares of all classes of stock of T Corporation. P is the common parent of a
				  parent-subsidiary controlled group consisting of member corporations P, S, and
				  T. The result would be the same if P, rather than S, owned the T stock.
Example (3). L Corporation owns eighty percent (80%) of the
				  only class of stock of M Corporation and M, in turn, owns forty percent (40%)
				  of the only class of stock of O corporation. L also owns fifty percent (50%) of
				  the only class of stock of N Corporation and N, in turn, owns forty percent
				  (40%) of the only class of stock of O. L is the common parent of a
				  parent-subsidiary controlled group consisting of member corporations L, M, N,
				  and O.
Example (4). X Corporation owns seventy-five percent (75%) of
				  the only class of stock of Y and Z Corporations; Y owns all the remaining stock
				  of Z; and Z owns all the remaining stock of Y. Since intercompany stockholdings
				  are excluded (that is, are not treated as outstanding) for purposes of
				  determining whether X owns stock possessing at least fifty percent (50%) of the
				  voting power or value of at least one of the other corporations, X is treated
				  as the owner of stock possessing one hundred percent (100%) of the voting power
				  and value of Y and of Z for purposes of this paragraph. Also, stock possessing
				  one hundred percent (100%) of the voting power and value of Y and Z is owned by
				  the other corporations in the group within the meaning of this paragraph. (X
				  and Y together own stock possessing one hundred percent (100%) of the voting
				  power and value of Z, and X and Z together own stock possessing one hundred
				  percent (100%) of the voting power and value of Y.) Therefore, X is the common
				  parent of a parent- subsidiary controlled group of corporations consisting of
				  member corporations X, Y and Z.
15.3. Brother-sister controlled group. - The
				term "brother-sister controlled group" means two or more corporations if the
				same five or fewer persons who are individuals, estates, or trusts own
				(directly or indirectly) singly or in combination, stock possessing at least
				fifty percent (50%) of the total combined voting power of all classes of stock
				entitled to vote or at least fifty percent (50%) of the total value of shares
				of all classes of stock of each corporation; and more than fifty percent (50%)
				of the total combined voting power of all classes of stock entitled to vote or
				more than fifty percent (50%) of the total value of shares of all classes of
				stock of each corporation, taking into account the stock ownership of each such
				person only to the extent such stock ownership is identical with respect to
				each such corporation. This definition of a brother-sister controlled group of
				corporations is illustrated by the following examples:
Example (1). The outstanding stock of corporations P, Q, R,
				  S, and T, which have only one class of stock outstanding, is owned by the
				  following unrelated individuals:
Corporations
Individuals
P
Q
R
S
T
Identical
Ownership
A
60%
60%
60%
60%
100%
60%
B
40%
C
40%
D
40%
E
40%
Total
100%
100%
100%
100%
100%
100%
Corporations P, Q, R, S, and T are members of a
				  brother-sister controlled group.
Example (2). The outstanding stock of corporations U and V,
				  which have only one class of stock outstanding, is owned by the following
				  unrelated individuals:
Individuals
Corporations
Identical
Ownership
U
V
F
5%
...
...
G
10%
...
...
H
10%
...
...
I
20%
...
...
J
55%
55%
55%
K
...
10%
...
L
...
10%
...
M
...
10%
...
N
...
10%
...
O
...
5%
...
____
____
____
TOTAL
100%
100%
55%
Corporations U and V are members of a brother-sister
				  controlled group because at least fifty percent (50%) of the stock of each
				  corporation is owned by the same five (5) or fewer persons.
15.4. Combined group. - The term "combined
				group" means any group of three (3) or more corporations, if each corporation
				is a member of either a parent-subsidiary controlled group of corporations or a
				brother-sister controlled group of corporations, and at least one of such
				corporations is the common parent of a parent-subsidiary controlled group and
				also is a member of a brother-sister controlled group. This definition of a
				combined group of corporations is illustrated by the following examples:
Example (1). Smith, an individual, owns stock possessing 80
				  percent of the total combined voting power of all classes of the stock of
				  corporations X and Y. Y, in turn, owns stock possessing 80 percent of the total
				  combined voting power of all classes of the stock of corporation Z. Since
				  --
(a) X, Y, and Z are each members of
				either a parent-subsidiary or brother-sister controlled group of corporations,
				and
(b) Y is the common parent of a
				parent-subsidiary controlled group of corporations consisting of Y and Z, and
				also is a member of a brother-sister controlled group of corporations
				consisting of X and Y, X, Y, and Z are members of the same combined group.
Example (2). Assume the same facts as in example (1), and
				  further assume that corporation X owns eighty percent (80) of the total value
				  of shares of all classes of stock of corporation T. X, Y, and Z, and T are
				  members of the same combined group.