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In plan years after June 30, 1987, petitioner owned all of
the issued shares in MFG. Therefore petitioner and MFG are
members of a controlled group,6 and the provisions of section 410
again apply as if MFG and petitioner were a single employer.
See, e.g., Achiro v. Commissioner, 77 T.C. 881, 906 (1981). The
combined number of eligible employees of the two companies was
seven for the plan year commencing July 1, 1987. The MGMT ESOP
covered only four of seven (57.1 percent) of the eligible
employees. Because less than 70 percent of the combined
employees of petitioner and MFG were participants in the MGMT
6 The definition of a controlled group for these purposes is
contained in sec. 1563(a). Sec. 1563(a) in relevant part
provides:
SEC. 1563(a). (a) Controlled Group of Corporations.--
For purposes of this part, the term “controlled group of
corporations” means any group of–-
(1) Parent-subsidiary controlled
group.--One or more chains of corporations connected
through stock ownership with a common parent corporation
if–-
(A) stock possessing at least
80 percent of the total combined
voting power of all classes of
stock entitled to vote or at least
80 percent of the total value of
shares of all classes of stock of
each of the corporations, except
the common parent corporation, is
owned (within the meaning of
subsection (d)(1)) by one or more
of the other corporations; * * *
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