04Mar 2021 by Pat Geddie
Does Section 4975 Permit an IRA Account Holder to Establish an IRA Grantor Trust Investment Vehicle and Act as the Trustee of the IRA Grantor Trust?

Does Section 4975 Permit an IRA Account Holder to Establish an IRA Grantor Trust Investment Vehicle and Act as the Trustee of the IRA Grantor Trust?

Tax Law, Uncategorized
By Anthony Diosdi IntroductionMany Individual Retirement Account (“IRA”) beneficiaries would like more control over the investments of their IRAs. Some IRA beneficiaries want to form investment vehicles to acquire such assets as cryptocurrencies that are rapidly increasing in value. A number of trust companies claim that the United States Tax Court case of Swanson v. Commissioner, 106 T.C. 76 (1996) authorizes the use of an IRA owned grantor trust at the direction of the IRA account holder as a trustee to act as an investment vehicle. This article will discuss whether an IRA grantor trust in which the IRA account holder is a trustee violates the meaning of Section 4975(c)(1)(D) and (E). An Overview of Internal Revenue Code Section 4975The growth of 401(k) plans and other defined contribution plans (as…
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28Aug 2019 by Pat Geddie
No, No, No, No….Prohibited Transactions and Disqualified Persons in Self-Directed IRAs Part II- The Taxation of Self-Directed IRAs

No, No, No, No….Prohibited Transactions and Disqualified Persons in Self-Directed IRAs Part II- The Taxation of Self-Directed IRAs

IRA
By Anthony Diosdi The appeal of investing retirement funds outside of the typical investments has driven a surge in the use of self-directed Individual Retirement Account (“IRA”) investment structures. Investments within self-directed IRAs frequently include real estate, closely held business entities, private loans, and can include any other investment that is not specifically prohibited by federal law. In my last blog, I discussed the legal implications of investing in a self-directed IRA. This blog I will discuss potential tax obligations and filing requirements associated with self-directed IRAs.Most individuals who fund a self-directed IRAs do not realize that funding such a structure may trigger tax obligations and filing requirements. Anyone considering funding a self-directed IRA must understand the term unrelated business taxable income (“UBTI”). If the self-directed IRA earns UBTI, the…
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