Using IRA Funds to Settle a Probate Dispute

Using Ira Funds To Settle A Probate Dispute

Inherited IRAs can present a number of challenges. In Ozimkoski v. Commissioner, T.C. Memo. 2016-228, the court considered the tax implications of a withdraw from an inherited IRA that was used to settle a probate dispute with the couple’s son. The case shows what not to do when using IRA funds to settle a probate…

LLC Owned by Self-Directed IRA Cannot Pay Wages

Llc Owned By Self-directed Ira Cannot Pay Wages

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed Ellis v. Commissioner, which held that the payment of wages for services to a self-directed IRA owner for his services rendered to an LLC owned by a self-directed IRA was a prohibited transaction. This case provides yet another example of how not to handle…

Self-Directed IRA Purchase of Real Estate is Taxable

Self-directed Ira Purchase Of Real Estate Is Taxable

Self-directed IRAs present a number of opportunities.  But what if the self-directed IRA custodian chooses to limit the account holder’s options?  Can the IRA account holder go around the custodian’s wishes?  The recent Dabney v. Commissioner, Docket No. 14566-12, provides an example where the purchase real estate by a self-directed IRA was a taxable distribution from…

Self-Directed IRA can Flip Houses & Share Ownership of Property

Irs Announces Significant Changes To Audit Process

In In re Cherwenka, the U.S. Bankruptcy Court for the Northern District of Georgia concluded that house flipping activities in a self-directed IRA and shared ownership of property with the IRA and the account holder were not prohibited transactions. Facts & Procedural History Mr. Cherwenka was in the business of flipping houses. Mr. Cherwenka established…

Promissory Notes Distributed by Self-Directed IRA Were Not Worthless

Promissory Notes Distributed By Self-directed Ira Were Not Worthless

Self-directed IRAs are usually profitable.  But there are times when they lose money.  In Berks v. Commissioner, Docket No. 26883-11S, the U.S. Tax Court addressed a situation where the IRAs held promissory notes that may have been worthless. Facts & Procedural History The Berks rolled over money from pre-existing IRAs to self-directed IRAs, with the…

Personal Guarantees for Self-Directed IRAs Are Prohibited Transactions

Irs Concludes Open-air Parking Garages Are Buildings

If you have a self-directed IRA, the IRA invests in LLCs, can you personally guarantee a loan for the LLC?  The court addressed this in Peek v. Commissioner, 140 T.C. 12. Facts & Procedural History Mr. Fleck identified a business opportunity that he intended to invest in.  Mr. Peek, Mr. Fleck’s lawyer, approached Mr. Fleck about…

Tax Free IRA Rollovers as Short-Term Loans: Two Examples of What Not to Do

Tax Free Ira Rollovers As Short-term Loans: Two Examples Of What Not To Do

Taxpayers often withdraw funds from their IRAs to cover short-term expenses with the hope that they can put the funds back in their IRA within the 60 day window for making a tax-free IRA rollover. When taxpayers miss this 60 day window, they are forced to ask the IRS to waive the 60 day time…

Part-Time Employee Not Entitled to Deduction for IRA Contribution

Part-time Employee Not Entitled To Deduction For Ira Contribution

Taxpayers who participate in their employer’s retirement plan are not able to deduct contributions the taxpayer makes to their IRA retirement account. This is also true for taxpayers who are entitled to participate in their employer’s retirement plan, but choose not do so. In Colombell v. Commissioner, T.C. 2006-184, the court considered whether an employee…

More on IRA Beneficary Designation Planning Opportunities

More On Ira Beneficary Designation Planning Opportunities

It is probably safe to say that most IRA owners really don’t put much thought into who they designate as their IRA beneficiary, but even IRA owners who do may very well have not done their planning correctly. This is especially true in that the IRA beneficiary designation rules are so complex. With traditional IRAs…

Entrepreneur Rollover Stock Purchase Plans

Entrepreneur Rollover Stock Purchase Plans

Financing a business start-up can be a challenge. Most traditional lenders require that a business be operational for at least a year before they will provide small business loans. Moreover, venture capitalists are quick to reject most start-up proposals and if the venture capitalist is willing to fund the start-up they typically demand a significant…