benefits of having an ira

2
Benefits Of Having An Ira The Self-Directed IRA Structure has been in usage for some 35 years, nevertheless, the concept of using an entity possessed by an IRA to make a financial https://www.suntrust.com/PersonalBanking/Retirement/IndividualRetirementAccounts investment was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson, the Tax Court, in judgment versus the IRS, held that the financing of a new entity by an Individual Retirement Account for self-directing assets was a permitted deal and not forbidden pursuant to Code Area 4975. In FSA 200128011, the Internal Revenue Service, in supplying guidance to Internal Revenue Service agents for purposes of carrying out audits, verified the Tax Court's holding in Swanson and held that a recently established entity had by an Individual Retirement Account and handled by the IRA owner might make investments making use of Individual Retirement Account funds without violating the prohibited transaction rules under Internal Revenue Code Area 4975. But only states what types of deals are prohibited when it comes to making Individual Retirement Account financial investments the IRS does not state which deals are enabled. The Individual Retirement Account restricted deal policies are outlined in Internal Income Code Sections 408 & 4975 and usually include the prohibition versus making use of IRA funds to purchase life insurance, collectibles, or participate in any transaction with a "disqualified person". According to the Internal Income Code, a "disqualified individual" is generally defined as the Individual Retirement Account holder and any of his/her lineal descendants or any entity managed by such person(s). The following is a summary of the essential cases & viewpoint validating the legality of the Self- Directed Individual Retirement Account LLC: Swanson V. Commissioner 106 T.C. 76 (1996). The appropriate truths of Swanson are as follows:. 1. Mr. Swanson was the sole shareholder of H & S Swansons' Tool Company (Swansons' Device). Mr. Swanson organized for the organization of Swansons' Worldwide, Inc. (Worldwide). Mr. Swanson also arranged for the development of an individual retirement account (Individual Retirement Account # 1). 3. Mr. Swanson directed the custodian of his IRA to carry out a membership arrangement for 2,500 shares of Worldwide initial released stock. The shares were subsequently issued to IRA # 1, which became the sole shareholder of Worldwide. 4. Swansons' Tool paid commissions to Worldwide with respect to the sale by Swansons' Device of export building. Mr. Swanson, who had been named president of Worldwide, directed, with the IRA custodian's consent, that Worldwide pay dividends to Individual Retirement Account # 1. 5. A similar arrangement was established with regards to IRA # 2 and a 2nd corporation called Swansons' Trading Business. 6. Mr. Swanson got no payment for his services as president and director of Swansons' Worldwide, Inc. and Swansons' Trading Business.

Upload: alivemystery8708

Post on 15-Dec-2015

219 views

Category:

Documents


4 download

DESCRIPTION

The Self-Directed IRA Structure has been in usage for some 35 years, nevertheless, the concept of us

TRANSCRIPT

Page 1: Benefits Of Having An Ira

Benefits Of Having An Ira

The Self-Directed IRA Structure has been in usage for some 35 years, nevertheless, the concept ofusing an entity possessed by an IRA to make a financialhttps://www.suntrust.com/PersonalBanking/Retirement/IndividualRetirementAccounts investmentwas first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson,the Tax Court, in judgment versus the IRS, held that the financing of a new entity by an IndividualRetirement Account for self-directing assets was a permitted deal and not forbidden pursuant toCode Area 4975. In FSA 200128011, the Internal Revenue Service, in supplying guidance to InternalRevenue Service agents for purposes of carrying out audits, verified the Tax Court's holding inSwanson and held that a recently established entity had by an Individual Retirement Account andhandled by the IRA owner might make investments making use of Individual Retirement Accountfunds without violating the prohibited transaction rules under Internal Revenue Code Area 4975.

But only states what types of deals are prohibited when it comes to making Individual RetirementAccount financial investments the IRS does not state which deals are enabled. The IndividualRetirement Account restricted deal policies are outlined in Internal Income Code Sections 408 &4975 and usually include the prohibition versus making use of IRA funds to purchase life insurance,collectibles, or participate in any transaction with a "disqualified person". According to the InternalIncome Code, a "disqualified individual" is generally defined as the Individual Retirement Accountholder and any of his/her lineal descendants or any entity managed by such person(s).

The following is a summary of the essential cases & viewpoint validating the legality of the Self-Directed Individual Retirement Account LLC:

Swanson V. Commissioner 106 T.C. 76 (1996).

The appropriate truths of Swanson are as follows:.

1. Mr. Swanson was the sole shareholder of H & S Swansons' Tool Company (Swansons' Device).

Mr. Swanson organized for the organization of Swansons' Worldwide, Inc. (Worldwide). Mr.Swanson also arranged for the development of an individual retirement account (IndividualRetirement Account # 1).

3. Mr. Swanson directed the custodian of his IRA to carry out a membership arrangement for 2,500shares of Worldwide initial released stock. The shares were subsequently issued to IRA # 1, whichbecame the sole shareholder of Worldwide.

4. Swansons' Tool paid commissions to Worldwide with respect to the sale by Swansons' Device ofexport building. Mr. Swanson, who had been named president of Worldwide, directed, with the IRAcustodian's consent, that Worldwide pay dividends to Individual Retirement Account # 1.

5. A similar arrangement was established with regards to IRA # 2 and a 2nd corporation calledSwansons' Trading Business.

6. Mr. Swanson got no payment for his services as president and director of Swansons' Worldwide,Inc. and Swansons' Trading Business.

Page 2: Benefits Of Having An Ira

The IRS assaulted Mr. Swanson's IRA deals on two levels. First, the Internal Revenue Service arguedthat the payment of dividends from Worldwide to Individual Retirement Account # 1 was a forbiddentransaction within the meaning of Code Section 4975(c)(1)(E) as an act of self-dealing, where adisqualified person who is a fiduciary deals with the assets of the strategy in his own interest. Mr.Swanson suggested that he engaged in no activities on behalf of Worldwide which benefited himaside from as a beneficiary of Individual Retirement Account # 1.