Controlled group provisions in the tax law prevent taxpayers from splitting a corporation into several smaller corporations to take advantage of low marginal corporate tax rates at low levels of income.

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Controlled group provisions are designed to prevent taxpayers from dividing a corporation into smaller entities to reduce their tax liability. This ensures that the IRS considers the group of corporations as one entity, thus eliminating any advantages of splitting up a corporation.

Controlled Group Provisions in the Tax Law Prevent Taxpayers from Splitting