This is in reply to your request for a ruling on the application of section 12-412(62) of the Connecticut General Statutes.
The above section entitled, "services rendered between parent companies and wholly-owned subsidiaries", was enacted during the special session of the Connecticut General Assembly in 1987.
You have provided a factual situation concerning a management company ["A"], the stock of which is 100% owned by five individuals. Three of those five individuals own 100% of various Connecticut corporations that receive business management services from the management company ["A"].
Section 12-412(62) of the Connecticut General Statutes provides, in part, that the sale of services:
A review of the call to special session and the proceedings of the House and Senate clearly indicates that the aforesaid exemption was to apply to parent-subsidiary controlled corporations or brother-sister controlled corporations with the exception that 100% ownership of stock was deemed to be controlled rather than the 80% allowed under the Internal Revenue Code.
Accordingly, it is hereby ruled that for the purposes of exemption from the sale of services under section 12-412(62) of the Connecticut General Statutes, the transactions must be between two corporations which are either a 100% parent-subsidiary ownership and control or 100% brother-sister ownership and control.
November 15, 1989