Self-directed IRAs (SDIRAs) are becoming more and more popular as IRA holders look to enter alternative investments. While SDIRAs can open up a world of investment options, the rules around them are complicated and compliance can be tricky. Below, we’ll look at a couple of relevant court cases that illustrate some of the potential pitfalls.

Self-Directed Equals Higher Fees

A SDIRA can own an investment in pretty much any type of asset except life insurance or collectibles. The downside to accessing investments beyond stocks, mutual funds, ETFs and bonds is that it is more expensive.

The SDIRA custodian usually charges an annual fee as well as per transaction fees. The assets also need to be valued at the end of every year for reporting purposes so there is usually a custodial appraisal or valuation fee. These fees and structures often lead to SDIRA owners taking shortcuts to save money or ease administration.

Side-Stepping Rules is Looking for Trouble

One recent case that went before the tax court involved a taxpayer whose SEP-IRA owned an LLC where he was the only owner and manager, with a national bank as the custodian. The taxpayer opened a checking account for the LLC at the same bank.

The taxpayer took distributions from his SEP-IRA and put the money into the LLC account. He then used the money to fund loans on real estate to third parties. The loans paid back over time and the repayments, including interest, were deposited back into the IRA.

The bank issued a Form 1099-R reporting the distributions as taxable events; however, the taxpayer included this income on his tax return. The IRS taxed distributions, plus the 10 percent penalty because he was under 59½. The case went to tax court with the taxpayer claiming he never actually took distributions because the money went from the IRA custodian to the LLC checking account.

The tax court found in favor if the IRS for several reasons. Most important of which is that the taxpayer held full control of the funds that were distributed. Another mistake was that he owned the LLC, which held his checking account and not the IRA. As a result, the bank as IRA custodian no longer held legal control over the money.

In the end, the taxpayer didn’t want to change custodians from the national bank, which held his SEP-IRA, because he didn’t want to pay the fees associated with setting-up a proper SDIRA. If he had, then he could have structured the investments to be made via the LLC, with the IRA as the owner of the LLC and avoided the taxable distributions completely. In the end, it cost him far more than the fees ever would have.

Collectibles Versus Property and Possession

In another case that went before the tax courts, the taxpayer opened an LLC owned by her IRA where she was the sole managing member. The IRA then purchased American Eagle gold coins, which she took physical delivery of and held in her possession.

IRAs are not allowed to own collectibles, with gold bullion and coins generally considered collectibles. There are exceptions however, with gold American Eagles being one of them – so no issue here.

The problem centered on whether the taxpayer took physical possession of the coins. The tax code says that exempt precious metals can held in physical possession by an IRA custodian. As a result, the taxpayer taking physical possession of the gold was deemed a distribution.


These two cases show that LLCs created to invest through a SDIRA must follow all the IRA rules. This is because the IRA is the entity considered to be engaged in all transactions executed by the LLC. Further, the IRA owner shouldn’t be the managing member of the LLC or take physical possession of the assets. It should always be the IRA custodian who holds the assets and maintains control.


Zwfoin · March 12, 2024 at 6:41 pm

buy atorvastatin generic lipitor 80mg sale buy atorvastatin generic

Uuwwsw · March 14, 2024 at 9:42 am

generic cipro 1000mg – buy keflex online buy augmentin 1000mg for sale

Glfxci · March 15, 2024 at 9:09 am

order cipro 500mg online cheap – generic keflex 250mg buy generic augmentin over the counter

Tekzxm · March 18, 2024 at 5:46 am

order metronidazole online cheap – order azithromycin 250mg for sale buy azithromycin without prescription

Znuwmg · March 19, 2024 at 6:30 pm

ivermectin 12mg tablets for humans – buy tetracycline 250mg pills tetracycline 500mg generic

Eqnbxq · March 20, 2024 at 10:50 am

order valtrex 500mg pills – nemasole online order order generic acyclovir

Occsfd · March 21, 2024 at 5:51 pm

ampicillin over the counter buy penicillin no prescription buy amoxil no prescription

Cmaxtk · March 22, 2024 at 5:04 am

order metronidazole pill – flagyl price brand azithromycin 250mg

Nhcylf · March 24, 2024 at 2:44 am

buy generic furosemide – captopril 25mg sale buy captopril 25mg for sale

Gqwwwf · March 25, 2024 at 2:47 pm

glycomet without prescription – epivir uk lincomycin oral

Revczy · March 27, 2024 at 5:22 pm

buy retrovir paypal – buy roxithromycin 150mg generic order allopurinol 100mg for sale

Gzpkcp · March 28, 2024 at 12:03 am

order clozaril 50mg pill – aceon 4mg generic pepcid pill

Rywpul · March 30, 2024 at 1:24 pm

seroquel cheap – desyrel generic buy eskalith pills

Yoojtd · March 30, 2024 at 4:36 pm

purchase clomipramine online cheap – order amoxapine 50 mg without prescription sinequan canada

Xqjuwg · April 1, 2024 at 9:03 am

brand hydroxyzine 25mg – order hydroxyzine 25mg generic amitriptyline 10mg pill

Eglhjq · April 3, 2024 at 7:20 pm

order augmentin 1000mg for sale – buy augmentin without a prescription buy cipro 1000mg pill

Qjknme · April 4, 2024 at 11:51 pm

buy amoxil tablets – order erythromycin 500mg pills cipro uk

Dyygsd · April 10, 2024 at 12:15 pm

buy clindamycin pills – buy chloromycetin without a prescription buy chloramphenicol without prescription

Lijjbc · April 12, 2024 at 10:38 am

ivermectin 3 mg – purchase eryc generic cefaclor canada

Cbtktw · April 14, 2024 at 3:09 am

buy allergy pills onlin – buy fluticasone generic buy theophylline without a prescription

Koenif · April 15, 2024 at 10:43 am

buy methylprednisolone online – buy cetirizine tablets astelin price

Bvmvmi · April 16, 2024 at 1:28 pm

clarinex 5mg pills – buy beclomethasone cheap order albuterol online cheap

Qdhxto · April 18, 2024 at 10:17 am

buy glyburide 2.5mg – buy glipizide 10mg without prescription buy dapagliflozin generic

Ddmqzb · April 19, 2024 at 12:59 pm

glycomet 1000mg without prescription – cozaar without prescription order acarbose

Jknpeq · April 20, 2024 at 2:27 pm

generic prandin 1mg – brand prandin 2mg order empagliflozin 25mg online cheap

Qpgpee · April 22, 2024 at 2:05 pm

order generic semaglutide 14mg – purchase glucovance generic buy generic DDAVP

Avvnxj · April 23, 2024 at 5:29 am

order terbinafine for sale – terbinafine over the counter griseofulvin pills

Ndocju · April 25, 2024 at 8:52 am

ketoconazole pill – purchase butenafine online order itraconazole 100mg pills

Gyazgw · April 25, 2024 at 3:36 pm

buy generic famvir for sale – order famciclovir sale buy valcivir pills for sale

Jcdrgw · April 27, 2024 at 11:28 am

purchase lanoxin sale – lasix 40mg for sale order furosemide pills

Gokytc · April 28, 2024 at 7:30 pm

where can i buy lopressor – micardis price buy adalat 30mg generic

Vwtagn · April 29, 2024 at 1:02 pm

microzide over the counter – norvasc 5mg uk bisoprolol tablet

Wjawca · May 1, 2024 at 12:26 pm

nitroglycerin price – catapres 0.1 mg cheap buy valsartan 80mg pills

Kkqxps · May 2, 2024 at 11:48 am

zocor ankle – tricor call lipitor moon

Xxslzp · May 4, 2024 at 4:18 am

rosuvastatin pills sex – rosuvastatin online shiver caduet buy grant

Kawwcj · May 6, 2024 at 9:45 am

buy viagra professional pilot – eriacta army levitra oral jelly online misery

Ysgzzc · May 6, 2024 at 6:22 pm

dapoxetine throb – levitra with dapoxetine shatter cialis with dapoxetine wash

Ytougi · May 9, 2024 at 1:40 am

cenforce top – tadalis online onto brand viagra online each

Rskpka · May 9, 2024 at 9:22 am

brand cialis gloomy – apcalis liberty penisole sink

Abcxej · May 11, 2024 at 9:56 pm

brand cialis harm – brand cialis coin penisole cease

Zqxqxi · May 12, 2024 at 11:32 am

cialis soft tabs pills port – cialis oral jelly feature viagra oral jelly online creature

Cfnfyl · May 15, 2024 at 6:26 am

cialis soft tabs online beat – levitra soft online whirl viagra oral jelly online speech

Ujenjs · May 18, 2024 at 6:06 pm

priligy neck – dapoxetine eat cialis with dapoxetine veil

Hqjwbr · May 19, 2024 at 5:52 am

cenforce online ford – cenforce steppe brand viagra online whisper

Bddxzu · May 20, 2024 at 8:06 am

inhalers for asthma sofa – asthma treatment ordinary asthma treatment pot

Jlwebv · May 20, 2024 at 6:22 pm

acne medication goose – acne medication make acne medication off

Gdfodt · May 22, 2024 at 5:08 am

prostatitis treatment inner – prostatitis medications study prostatitis treatment planet

Qxzzgv · May 22, 2024 at 1:53 pm

treatment for uti personality – uti medication whole uti medication yet

Jywpur · May 24, 2024 at 3:23 am

claritin pills dead – loratadine roger claritin pills atmosphere

Pibrfo · May 24, 2024 at 12:50 pm

valtrex online painful – valacyclovir online impressive valtrex address

Ofqddd · May 27, 2024 at 6:41 am

dapoxetine list – priligy trickle dapoxetine intend

Ioqmux · May 28, 2024 at 5:16 pm

claritin pills objection – claritin pills div loratadine medication snatch

Edwzdi · May 30, 2024 at 4:59 pm

ascorbic acid lantern – ascorbic acid college ascorbic acid photograph

Jnmxsc · May 31, 2024 at 4:48 pm

promethazine shore – promethazine coffin promethazine diary

Doezww · June 1, 2024 at 5:01 pm

clarithromycin pills especial – cytotec pills through cytotec pills loom

Vmeaou · June 3, 2024 at 12:06 pm

florinef pills care – florinef pills touch lansoprazole pills exhaust

Hiobwy · June 6, 2024 at 2:07 pm

aciphex 10mg ca – how to buy metoclopramide buy motilium online

Ctmrsa · June 7, 2024 at 12:52 pm

dulcolax usa – order ditropan 2.5mg generic liv52 online order

Qeqlqj · June 9, 2024 at 12:15 pm

order eukroma without prescription – order cerazette sale duphaston 10 mg uk

Cfxarw · June 10, 2024 at 2:57 am

bactrim usa – order cotrimoxazole without prescription buy tobrex 5mg online cheap

Sdjxsd · June 11, 2024 at 12:33 pm

order griseofulvin 250 mg generic – order generic dipyridamole buy lopid 300 mg

Tzbejf · June 12, 2024 at 5:31 am

order dapagliflozin 10mg online cheap – buy sinequan 25mg pills precose generic

Deovwc · June 13, 2024 at 12:31 pm

pill dramamine – actonel 35mg pill risedronate order online

Tmzusj · June 14, 2024 at 3:34 pm

generic enalapril – doxazosin for sale order latanoprost online

Leave a Reply

Avatar placeholder

Your email address will not be published. Required fields are marked *