The IRS is charging a couple hundreds of thousands in taxes and penalties for inappropriate use of a self directed IRA in which they personally stored gold and silver coins. The US Tax Court has upheld the decision. Be careful with tax laws folks!
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They wanted their cake and eat it too.
Play stupid games, win stupid prizes. Sounds like the investors thought they were smarter than everyone else.
Do you have the link for the court findings? previous court precedent was that SDIRA's can invest in LLC's managed by the beneficiary, provided the LLC is correctly structured and the beneficiary (and their relatives) receive no tangible benefit from the investments. So for example, your SDIRA LLC that you manage can own a rental property, but if your mom is a tenant (or you draw a salary from the LLC for managing it), the IRA is retroactively dissolved from the moment that mom signs the lease.
A member managed (as opposed to manager managed) LLC is a serious no-no right out of the gate, but I'm curious if this was a structuring issue with the LLC only, or if the court ruled no physical possession of any bullion period.
So what would have been an example of a proper place to have stored those metals?
Singapore’s monetary authority bought 20% more gold
This is exactly what my wife and I have for our IRAs, but we have only use vaulted storage accounts and broker accounts, never physical delivery. Though we now have rescinded "U.S. citizen" status and recorded our birthright status as nationals of our state (making us nonresident aliens as far as the IRS is concerned) and will likely be revoking our election to pay income taxes next year. So we're probably going to unwind the whole self-directed IRA structure anyway.
So basically, there's no way to have an IRA without counterparty risk; you must leave the assets in the hands of a third party for decades.
Certified trustee… Someone legit. Like JPM for Madoff. lol
Does this apply to self directed self custody btc IRAs??
Paul, I disagree in the need for vaulted metals. Once someone has a significant position in physical metal in their possession, the next step would be a ROTH. The reason for this is obviously the tax advantages- I have seen your video on how a ROTH vs typical retirement account have essentially the same tax liability. My rationale for the ROTH is I, when governments go bankrupt, they get grabby (Argentina). A windfall tax on PM's is very possible in the coming years. The ROTH prevents this with lots of legal hurdles for the government to overcome if they wanted to go that route.
Screw the IRS! What did they do to deserve anything. My home town, LA, has tents and trash in the street and they want tax money from the people. So tough on us, but not so tough on the taliban or cartels.
Hi Paul, what are you thoughts on Bitcoin as a store of value. Thanks
IRAs are scams. We love to say "if you don't hold it, you don't own it" for gold, but then somehow being unable to realize your purchasing power for decades in a custodial account is fine?
It seems the McNultys were aware that this "CheckBook IRA" scheme was borderline at best but chose to continue with it and not disclose anything to their tax CPA = culpability. The CheckBook IRA company knew exactly what it was doing and they should probably all be strung up.
Interesting article. Thanks.
Andy S looks like a used car salesman. This report proves it.
It would seem that a nice intelligent couple attempted to do a little creative tax evasion. But I am quite sure that the IRS does not give "NICE TRY" awards.
Great video
2 points:
I also thought funding a self directed IRA from 401K would have some tax liabilities as well.
Pay the tax.when I traded a small amount of cryptos in the past, I spent the unreasonable amount of time to calculate gains/losses. Don’t trade unless you got the tools to document the trade. Don’t trade physical Au/Ag. Too much time for the benefit.
Hi Paul, Greetings from Stuttgart Germany.
In Canada, you can hold physical precious metals inside of our IRA equivalent self-directed accounts but it must be held in a registered vault- with all associated storage costs being charged monthly. It is a most cumbersome investment.
When I remember that in the UK, buying UK-minted gold coins like gold Britannias and gold Sovereigns is exempt of both VAT upon purchase and capital gains tax upon sale, I fantasize that someday the US might introduce such laws, but I’m not very hopeful that such a thing will ever happen here.