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 socrateaser Your Own Question
socrateaser
socrateaser, Lawyer
Category: Tax
Satisfied Customers: 38129
Experience:  Retired (mostly)
10097515
Type Your Tax Question Here...
socrateaser is online now
A new question is answered every 9 seconds

I have a new checkbook roth LLC IRA. I have access to 100k

Resolved Question:

I have a new checkbook roth LLC IRA. I have access to 100k of credit through/from my personal credit. How can I safely utilize that credit with in my roth LLC?
Submitted: 4 years ago.
Category: Tax
Expert:  socrateaser replied 4 years ago.
Hello,

I don't understand what you are trying to accomplish here. Please elaborate.

Thanks.
Customer: replied 4 years ago.

I had a new self directed Roth LLC check book account set up with IRA Services Trust Co. as the custodian. It was set up with the trust co. as a member and me as the manager. One of the powers of the manager is to; 1. Borrow money from any Person for any Company purpose on whatever terms and conditions the Manager deems advisable, to obligate the Company to repay the borrowed money, and in connection therewith to encumber or hypothecate Company property as security for such repayment by mortgage, deed of trust, pledge or otherwise;

OK my question: I have a fair amount of business credit (through a Sole Proprietorship entity not in my name, but owned by me) that I would like to deposit to a third person's account.(no relation) Then ‘as the manager' borrow that money from the third person account for the Roth LLC for investing in a managed trading account. Is this doable or is there a safe way to do this process?

Expert:  socrateaser replied 4 years ago.
If the IRS is able to connect the dots between your credit to the third party and the loan to your IRA, then the IRA will be declared invalid and fully taxable on any accumulated income -- because the transaction will have actually taken place with a "disqualified person" (you). As an arm's length transaction with a third party, however, you can borrow the money and use it for your purposes within the IRA.

So, to paraphrase the immortal words of the late President, Richard M. Nixon, "Don't get caught."

Hope this helps.

NOTICE: My goal here is to educate the public about the law. Please help me in this effort by clicking Accept (or, click on one of the happy smiley faces/stars/etc., if applicable) for my Answer to your Question. If you have a subscription account, clicking Accept does not create any additional charge. It merely gets me credit for my Answer.

And, if you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Thanks!

Please Click the following link for IMPORTANT LEGAL INFORMATION.

Customer: replied 4 years ago.
So is there a way to create a separate business entity (LLC or corporation) that would act as holding company for the IRA. Then I would transfer funds to that entity?
Expert:  socrateaser replied 4 years ago.
I can't help you to set up a shell business entity to permit you to violate federal tax law. I could lose my license. Sorry, but I must draw the line here.

Hope this helps.

NOTICE: My goal here is to educate the public about the law. Please help me in this effort by clicking Accept (or, click on one of the happy smiley faces/stars/etc., if applicable) for my Answer to your Question. If you have a subscription account, clicking Accept does not create any additional charge. It merely gets me credit for my Answer.

And, if you need to contact me again, please put my user id at the beginning of your question ("To Socrateaser"), and the system will send me an alert. Thanks!

Please Click the following link for IMPORTANT LEGAL INFORMATION.

socrateaser and other Tax Specialists are ready to help you
Customer: replied 4 years ago.

I'm not asking you to help me to set up a shell business entity to violate federal tax law. I'm asking what's doable or what's not!