Not all stock issued by a corporation is counted to determine if a controlled group exists. The Code excludes several types of stock from both the numerator and denominator of controlled group calculations.
Unfortunately, the exclusions differ slightly depending on whether you are analyzing a parent-subsidiary group or a brother-sister group. To further complicate matters, some types of stock are always excluded from the calculation; others are excluded only if specified conditions are met, and then only if the exclusion would create a controlled group, but not if they would prevent a controlled group from being recognized.
While the exclusions do not crop up always or even most of the time, practitioners need to be aware of them because they can be significant.
 | Q 8:1 Is there any kind of stock that is always excluded in determining controlled groups, regardless of the circumstances? |
| Q 8:2 What is nonvoting preferred stock? |
| Q 8:3 What is treasury stock? |
| Q 8:4 What is “excluded stock” that can be excluded in determining parent-subsidiary controlled groups? |
| Q 8:5 Under what conditions is stock described in Q 8:4 excluded in determining whether a parent-subsidiary controlled group exists? |
| Q 8:6 What is the method for determining if a parent-subsidiary group exists if there is excluded stock? |
| Q 8:7 What is “excluded stock” that can be excluded in determining brother-sister controlled groups? |
| Q 8:8 Under what conditions is stock described in Q 8:7 excluded in determining whether a brother-sister controlled group exists? |
| Q 8:9 What is the method for determining if a brother-sister group exists if there is excluded stock? |
| Q 8:10 Who is a principal stockholder of a corporation? |
| Q 8:11 What attribution rules are considered in determining if stock is excluded? |
| Q 8:12 Who is an employee for the exclusion rules? |
| Q 8:13 Who is an officer for the exclusion rules? |
| Q 8:14 What are conditions which substantially restrict an owner’s right to transfer stock? |
| Q 8:15 In whose favor does a transfer restriction run? |