Both employees therefore provide services to Employer A's tire and automotive products line of business within the meaning of Treas.
A line of business is deemed to have its own separate management if at least 80 percent of the top-paid employees provide their services exclusively to that line.
The percentage represents the number of top-raid employees who devote substantial services to the line of business in relation to all top-paid employees who provide any services to the line of business.
Of the 1,000 employees who constitute the top 10 percent by compensation of these 10,000 employees, 930 are substantial-service employees with respect to that line of business.
Using the following method, a separate gross profit percentage must be calculated for each line of business.
Example: The aggregate sales of property in an employer's line of business in the prior tax year was $800,000; the property's aggregate cost was $600,000.
Employees--including spouses, dependent children, retirees and some widow/widowers--must work in the same line of business in which the property is being offered for sale.
In order for a line of business to be a "separate" line of business, Prop.
Thus, if an employee is carried on a separate-line-of-business payroll and is entitled to the same pension benefits as all employees in that line of business, the employee should be treated as providing services exclusively to that line of business.
Assigning shared employees to the dominant line of business will minimize the administrative burdens of Prop.
Employees who do not perform substantial services for any one particular line of business (for example, headquarters' employees) must be allocated to lines of business under specific allocation rules.
The dominant line of business method generally is the most attractive method available to allocate residual employees (Regs.