It is important to be aware of the IRS rules. It is also important to note that people who dabble in the gray area should know that in these areas, the IRS determines 'intent' and that means a gray area can quickly be deemed a prohibited transaction.
Atlanta, GA (PRWEB) November 09, 2015
Jim Hitt is a strong supporter of Self-Directed IRA clients educating themselves so that they can both maximize their profits and protect their IRA funds. This Forbes blog post "Prohibited Transaction Causes IRA To Lose Bankruptcy Exemption" begins by explaining that some people are not aware that many IRAs benefit from bankruptcy protection. The blog cautions that this protection can be lost.
Jim comments "It is absolutely true that bankruptcy protection can be lost. Prohibited transactions performed in an IRA not only result in penalties and taxes but also in the loss of protections, such as bankruptcy protection. This is why it is critically important to be aware of the IRS rules. It is also important to note that people who dabble in the gray area should know that in these areas, the IRS determines 'intent' and that means a gray area can quickly be deemed a prohibited transaction."
The blog goes on to say "The transactions at issue involved the acquisition and development by the IRA of four acres of real property. Basically, the debtor and his wife co-owned a limited liability company that, with the IRA, executed a partnership agreement. That agreement provided that the IRA would contribute capital by delivering the real property as a noncash contribution; the IRA would also contribute cash, too. Under the agreement, the LLC would later contribute cash. The IRA funded the entire purchase price of the land. The land was conveyed to the IRA and the LLC, both with an undivided one-half interest."
On the surface, this transaction seems okay. Though as the courts dug deeper, things began to unravel and it was determined that the IRA account holders received a current benefit from this transaction.
This is a very important blog that should be viewed by every IRA holder to ensure they understand the case so they can ensure they are not performing transactions that can also be deemed as prohibited.
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