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The question is about a Self-Directed IRA that invests in an…

The question is about a...
The question is about a Self-Directed IRA that invests in an LLC. Is the cost of forming the LLC deductible in a tax filing, and if yes, where do I do the deduction?
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Answered in 7 minutes by:
3/20/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,137
Experience: Taxes, Immigration, Labor Relations
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the cost of forming the LLC should be paid from IRA funds .

The IRA beneficiary may not pay that cost directly - and correspondingly - may not deduct such cost.

If the cost of forming the LLC is paid with personal funds - that will a prohibited transaction.

Please verify.

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Customer reply replied 4 months ago
The IRA will pay the cost of forming the LLC.
Customer reply replied 4 months ago
The IRA will pay the cost of forming the LLC. Is the cost deductible anywhere as an expense?

When paid with IRA funds - that is not deductible expense, but that will reduce future IRA distribution.

Income realized inside IRA is not recognized fro tax purposes - correspondingly expenses are not deducted inside IRA.

Income will be only recognized upon distribution.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,137
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 4 months ago
Okay, thank you.
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