### Question
How does the law define system group?


### Answer
Under *26 U.S.C. § 1083*, **system group** is defined as:

> one or more chains of corporations connected through stock ownership with a common parent corporation if—


(1) at least 90 percent of each class of the stock (other than (A) stock which is preferred as to both dividends and assets, and (B) stock which is limited and preferred as to dividends but which is not preferred as to assets but only if the total value of such stock is less than 1 percent of the aggregate value of all classes of stock which are not preferred as to both dividends and assets) of each of the corporations (except the common parent corporation) is owned directly by one or more of the other corporations

#### Citation:
  - *26 U.S.C. § 1083*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter O-Gain or Loss on Disposition of Property > PART VI-EXCHANGES IN OBEDIENCE TO S.E.C. ORDERS**

