How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask MequonCPA Your Own Question
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
Type Your Tax Question Here...
MequonCPA is online now
A new question is answered every 9 seconds

I have a self directed IRA which loaned out $32,000.00 to a

Resolved Question:

I have a self directed IRA which loaned out $32,000.00 to a company with two business partners. $16,000.00 was paid back by one of the partners. The other partner absconded with the money from the business and disappeared. The remaining partner paid half but did not continue paying in full as she wanted the other partner to pay. She even hired an attorney to try to track her down and file fraud charges. No action has been taken on their part. And it has been several years at this point.
Our self directed account statement still shows the full amount of $32,000.00 being in my account. They say they can not change the figure to reduce the fair market value unless I file a lawsuit and seek judgment. Since this is a nondeductible loss, can I have the current partner write a letter documenting 3rd party evidence on the non collectible debt? Must I file a suit? The attorney I have contacted wants a $2500.00 down payment to begin the process. I hate to throw good money after bad--I know I am not going to collect anything and hate to spend more just for a piece of paper that may not be necessary.
Submitted: 5 years ago.
Category: Tax
Expert:  MequonCPA replied 5 years ago.

Hi and welcome to JustAnswer:


Having a self directed IRA provides investment flexibility. However, along with the increased flexibility you are bound by the policies of the trustee.


How can the note still be at $32K if $16K has be repaid?


Your best option is to find another attorney that may be more reasonable in fees. The attorney should understand the specific situation to assist in determining fees and collectability of note.


While the remaining partner paid only 50% of the note, your loan was to the partnership and you can attempt to collect the full amount of note from either partner or both. It is then up to the payor to attempt collection from the absconding partner rather than you.

MequonCPA and other Tax Specialists are ready to help you