Dec 12

New Bitcoin Future Market to Increase Popularity of Cryptocurrencies for Self-Directed IRA Investors

Bitcoin futures contract expected to allow retirement account investors using cash to purchase future contracts without margin

IRA Financial Group, the leading provider of self-directed IRA LLC and Solo 401(k) Plans, expects that the new Bitcoin futures exchange will increase the popularity for Bitcoins and other cryptocurrencies for all investors, including self-directed IRA investors.

New Bitcoin Future Market to Increase Popularity of Cryptocurrencies for Self-Directed IRA InvestorsThe launch of the bitcoin futures by CME Group, one of the largest exchange groups in the world, represents a milestone for the digital currency. Bitcoin has been the best-performing asset in financial markets in 2017 rising approximately 1500%. According to Adam Bergman, partner with the IRA Financial Group, “the Bitcoin exchange will allow two parties to exchange Bitcoin at a specified price at an agreed upon date in the future. Because CME’s bitcoin futures will settle in cash, retirement investors will be able to use their IRA or 401(k) funds to purchase future contracts and generate tax-deferred or tax-free returns.”

IRA Financial Group & IRA Financial Trust Company’s Crypto IRA platform with checkbook control will allow retirement account holders to buy, sell, or hold Bitcoins and other cryptocurrency assets and generate tax-deferred or tax-free gains, in the case of a Roth IRA. The primary advantage of using a self-directed IRA LLC to make Bitcoin investments is that all income and gains associated with the IRA investment grow tax-deferred or tax-free in the case of a Roth IRA.

IRA Financial Group & IRA Financial Trust Company has partnered to offer a Bitcoin IRA LLC platform for cryptocurrency investors. The self-directed IRA LLC is an IRS approved structure that allows one to use their retirement funds to make Bitcoin and other investments tax-free and without custodian consent.

IRA Financial Group is the market’s leading provider of self-directed retirement plans. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

The IRA Financial Trust Company, a self-directed IRA custodian, was founded by Adam Bergman, a partner with the IRA Financial Group.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

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Dec 04

Tax Efficiency is Most Popular Reason for Investors Establishing a Self-Directed IRA to Purchase Cryptocurrencies

Opportunity to generate tax-free income and gains from cryptocurrency investments most popular reason behind using a self-directed Roth IRA to make investment

IRA Financial Group, the leading provider of self-directed IRA LLC and Solo 401(k) Plan announces the finding of its internal report which concluded that tax efficiency was the primary reason behind investors using a self-directed IRA or Roth IRA to purchase cryptocurrencies, such as bitcoins. “The primary advantage of using a self-directed IRA LLC to make Bitcoin investments is that all income and gains associated with the IRA investment grow tax-deferred or tax-free in the case of a Roth IRA,” stated Adam Bergman, a partner with the IRA Financial Group.

IRA Financial Group & IRA Financial Trust Company has partnered to offer a Bitcoin IRA LLC platform for cryptocurrency investors. The self-directed IRA LLC is an IRS approved structure that allows one to use their retirement funds to make Bitcoin and other investments tax-free and without custodian consent.

Tax Efficiency is Most Popular Reason for Investors Establishing a Self-Directed IRA to Purchase CryptocurrenciesIRA Financial Group is the market’s leading provider of self-directed retirement plans, including the Bitcoin IRA and cryptocurrency self-directed IRA. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

The IRA Financial Trust Company, a self-directed IRA custodian, was founded by Adam Bergman, a partner with the IRA Financial Group.

Adam Bergman, IRA Financial Group partner, has written six books the topic of self-directed retirement plans, including, “The Checkbook IRA”, “Going Solo,” Turning Retirement Funds into Start-Up Dreams, Solo 401(k) Plan in a Nutshell, Self-Directed IRA in a Nutshell, and in God We Trust in Roth We Prosper.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

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Sep 25

Is a Self-Directed IRA LLC Approved by the IRS?

The Self-Directed IRA Structure has been in use for some 35 years, however, the concept of using an entity owned by an IRA to make an investment was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996). In Swanson, the Tax Court, in ruling against the IRS, held that the funding of a new entity by an IRA for self-directing assets was a permitted transaction and not prohibited pursuant to Code Section 4975. The Swanson Case was later affirmed by the IRS in Field Service Advice Memorandum (FSA) 200128011. In FSA 200128011, the IRS, in providing guidance to IRS agents for purposes of conducting audits, confirmed the Tax Court’s holding in Swanson and held that a newly established entity owned by an IRA and managed by the IRA owner may make investments using IRA funds without violating the prohibited transaction rules under Internal Revenue Code Section 4975. In October 2013, the Tax Court in T.L. Ellis, TC Memo. 2013-245, Dec. 59,674(M) held that establishing a special purpose limited liability company (“LLC”) to make an investment did not trigger a prohibited transaction, as a newly established LLC cannot be deemed a disqualified person pursuant to Internal Revenue Code Section 4975. The impact of the impact of this ruling is enormous because it directly supports the position that a retirement account can fund a newly established LLC without triggering a prohibited transaction. The Ellis case is decisive because it will silence anyone who claims that using a special purpose LLC to make IRA investments would trigger a prohibited transaction.

Is a Self-Directed IRA LLC Approved by the IRS?When it comes to making IRA investments the IRS does not state which transactions are allowed, but only states what types of transactions are prohibited. The IRA prohibited transaction rules are outlined in Internal Revenue Code Sections 408 & 4975 and generally involve the prohibition against using IRA funds to buy life insurance, collectibles, or enter into any transaction with a “disqualified person”. As per the Internal Revenue Code, a “disqualified person” is generally defined as the IRA holder and any of his or her lineal descendants or any entity controlled by such person(s).

The following is a summary of the key cases & opinion confirming the legality of the Self-Directed IRA LLC:

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

The relevant facts of Swanson are as follows:

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

2. Mr. Swanson arranged for the organization of Swansons’ Worldwide, Inc. (Worldwide). Mr. Swanson was named as president and director of Worldwide. Mr. Swanson also arranged for the creation of an individual retirement account (IRA #1).

3. Mr. Swanson directed the custodian of his IRA to execute a subscription agreement for 2,500 shares of Worldwide original issued 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’ Tool of export property. Mr. Swanson, who had been named president of Worldwide, directed, with the IRA custodian’s consent, that Worldwide pay dividends to IRA #1.

5. A similar arrangement was set up with regards to IRA #2 and a second corporation called Swansons’ Trading Company.

6. Mr. Swanson received no compensation for his services as president and director of Swansons’ Worldwide, Inc. and Swansons’ Trading Company.

The IRS attacked Mr. Swanson’s IRA transactions on two levels. First, the IRS argued that the payment of dividends from Worldwide to IRA #1 was a prohibited transaction within the meaning of Code Section 4975(c)(1)(E) as an act of self-dealing, where a disqualified person who is a fiduciary deals with the assets of the plan in his own interest. Mr. Swanson argued that he engaged in no activities on behalf of Worldwide which benefited him other than as a beneficiary of IRA #1.

The Tax Court ruled for Mr. Swanson, and found that the IRS was not substantially justified in its position. The court said that section 4975(c)(1)(E) addresses itself only to acts of disqualified persons who, as fiduciaries, deal directly or indirectly with the income or assets of a plan for their own benefit or account. In Mr. Swanson’s case the court found that there was no such direct or indirect dealing with the income or assets of the IRA. The IRS never suggested that Mr. Swanson, acting as a “fiduciary” or otherwise, ever dealt with the corpus of IRA #1 for his own benefit. The Tax Court, in holding for Swanson, stated the following:

“We find that it was unreasonable for [the IRS] to maintain that a prohibited transaction occurred when Worldwide’s stock was acquired by IRA #1. The stock acquired in that transaction was newly issued — prior to that point in time, Worldwide had no shares or shareholders. A corporation without shares or shareholders does not fit within the definition of a disqualified person under section 4975(e)(2)(G). It was only after Worldwide issued its stock to IRA #1 that petitioner held a beneficial interest in Worldwide’s stock, thereby causing Worldwide to become a disqualified person under section 4975(e)(2)(G). . .  Therefore, [the IRS’] litigation position with respect to this issue was unreasonable as a matter of both law and fact.”

Therefore, the Tax Court held that the only direct or indirect benefit that Mr. Swanson realized from the payments of dividends by Worldwide related solely to his status as a participant of IRA #1. In this regard, Mr. Swanson benefited only insofar as IRA #1 accumulated assets for future distribution.

The second issue the IRS raised was that the sale of stock by Worldwide to Mr. Swanson’s IRA was a prohibited transaction within the meaning of section 4975(c)(1)(A) of the Code, which prohibits the direct or indirect sale or exchange, or leasing, of any property between an IRA and a disqualified person. Mr. Swanson argued that at all relevant times IRA #1 was the sole shareholder of Worldwide, and that since the 2,500 shares of Worldwide issued to IRA #1 were original issue, no sale or exchange of the stock occurred.

Once again, the tax court agreed with Mr. Swanson. The critical factor was that the stock acquired in that transaction was newly issued – prior to that point in time, Worldwide had no shares or shareholders. The court found that a corporation without shares or shareholders does not fit within the definition of a disqualified person under section 4975(e)(2)(G). It was only after Worldwide issued its stock to IRA #1 that Swanson held a beneficial interest in Worldwide’s stock, thereby causing Worldwide to become a disqualified person. Accordingly, the issuance of stock to IRA #1 did not, within the plain meaning of section 4975(c)(1)(A), qualify as a “sale or exchange, or leasing, of any property between a plan and a disqualified person”.

The significance of the Swanson ruling was that the Tax Court approved the investment of IRA funds into a newly established entity that is managed by the IRA account holder. In ruling in favor or Mr. Swanson, the Tax Court formally approved the idea of an IRA holder being the sole director and officer of an entity owned by his IRA. In other words, the tax court endorsed a transaction whereby IRA funds are invested in a newly established entity such as a limited liability company of which the IRA owner is the manager. The Swanson Case clearly suggests that as long as the entity is newly established, the investment of IRA funds into that entity would not be treated as a prohibited transaction pursuant to Internal Revenue Code Section 4975.

IRS Field Service Advice Memorandum 200128011

IRS Field Service Advice (FSA) Memorandum 200128011 was the first IRS drafted opinion that confirmed the ruling of Swanson that held that the funding of a new entity by an IRA for self-directing assets was not a prohibited transaction pursuant to Code Section 4975.

An FSA is issued by the IRS to IRS field agents to guide them in the conduct of tax audits.

USCorp is a domestic sub-chapter S Corporation. Father owns a majority of the shares of USCorp. Father’s three minor children own the remaining shares of USCorp equally. USCorp is in the business of selling Product A and some of its sales are made for export.

Father and each child own separate IRAs. Each of the four IRAs acquired a 25% interest in FSC A, a foreign sales corporation (“FSC”). USCorp entered into service and commission agreements with FSC A. FSC A agreed to act as commission agent in connection with export sales made by USCorp, in exchange for commissions based upon the administrative pricing rules applicable to FSCs. USCorp also agreed to perform certain services on behalf of FSC A, such as soliciting and negotiating contracts, for which FSC A would reimburse USCorp its actual costs.

During Taxable Year 1, FSC A made a cash distribution to its IRA shareholders, out of earnings and profits derived from foreign trade income relating to USCorp exports. The IRAs owning FSC A each received an equal amount of funds.

IRS advised that, based on Swanson, neither issuance of stock in FSC to IRAs nor payment of dividends by FSC to IRAs constituted direct prohibited transaction. o IRS warned that, based on facts, transaction could be indirect.

In light of Swanson, the IRS concluded that a prohibited transaction did not occur under Code Section 4975(c)(1)(A) in the original issuance of the stock of FSC A to the IRAs. Similarly, the IRS held that payment of dividends by FSC A to the IRAs in this case is not a prohibited transaction under Code Section 4975(c)(1)(D). The IRS further concluded that in light of Swanson, the ownership of FSC A stock by the IRAs, together with the payment of dividends by FSC A to the IRAs, should not constitute a prohibited transaction under Code Section 4975(c)(1)(E).

The significance of FSA 200128011 is that the IRS confirmed the Tax Court’s ruling in Swanson, which ruled against the IRS. Like Swanson, the FSA advised IRS agents conducting audits that the creation and ownership of a new entity by an IRA for investment purposes would not be considered a prohibited transaction under Code Section 4975. Furthermore, the IRS established that the payments of dividends by an IRA owned entity to an IRA would not constitute a prohibited transaction. Like the Tax Court in Swanson, the IRS concluded that an investment into a newly established entity to make IRA investments would not be a prohibited transaction pursuant to Internal Revenue Code Section 4975. The IRS, in confirming the Tax Court’s ruling in Swanson, seemed to suggest that the focus on whether a transaction is prohibited pursuant to IRS rules should be examined based on how IRA funds are invested not on the structure used to effect the investment. In other words, the type of investment made with IRA funds once contributed to the newly formed entity will determine whether the transaction is prohibited under Internal Revenue Code Section 4975, not the vehicle that was used to make the investment.

T.L. Ellis, TC Memo. 2013-245, Dec. 59,674(M)

On October 29, 2013, the Tax Court in T.L. Ellis, TC Memo. 2013-245, Dec. 59,674(M), held that establishing a special purpose limited liability company (“LLC”) to make an investment did not trigger a prohibited transaction, as a newly established LLC cannot be deemed a disqualified person pursuant to Internal Revenue Code Section 4975.

In TC Memo. 2013-245, Mr. Ellis retired with about $300,000 in his section 401(k) retirement plan, which he subsequently rolled over into a newly created self-directed IRA.

The taxpayer then created an LLC taxed as a corporation and had his IRA transfer the $300,000 into the LLC. The LLC was formed to engage in the business of used car sales. The taxpayer managed the used car business through the IRA LLC and received a modest salary.

The IRS argued that the formation of the LLC was a prohibited transaction under section 4975, which prohibits self-dealing. The Tax Court disagreed, holding that even though the taxpayer acted as a fiduciary to the IRA (and was therefore a disqualified person under section 4975), the LLC itself was not a disqualified person at the time of the transfer. After the transfer, the LLC was a disqualified person because it was owned by the Mr. Ellis’s IRA, a disqualified person. Additionally, the IRS also claimed that the taxpayer had engaged in a prohibited transaction by receiving a salary from the LLC. The court agreed with the IRS. Although the LLC (and not the IRA) was officially paying the taxpayer’s salary, the Tax Court concluded that since the IRA was the sole owner of the LLC, and that the LLC was the IRA’s only investment, the taxpayer (a disqualified person) was essentially being paid by his IRA.

The impact of the Tax Court’s ruling in TC Memo. 2013-245 is significant because it directly confirms the legality of the self-directed IRA LLC solution by validating that a retirement account can fund a newly established LLC without triggering a prohibited transaction. The Tax Court’s decision in TC Memo. 2013-245 is important because it will silence the small percentage of people still trying to deny the legality of the self-directed IRA LLC solution even after the Swanson Case and the 2001 IRS opinion letter confirmed its validity.

In many respects the Tax Court’s ruling in TC Memo. 2013-245 is more important than the Swanson ruling and IRS advisory opinion. Firstly, TC Memo. 2013-245 is the first case that directly reinforces the legality of using a newly established LLC to make IRA investments without triggering an IRS prohibited transaction. The Swanson case as well as IRS Advisory opinion involved a corporation, not a LLC. Secondly, TC Memo. 2013-245 demonstrates the importance of working with specialized tax professionals who have the necessary expertise regarding the IRS prohibited transaction rules before establishing a self-directed IRA “checkbook control” structure. If Mr. Ellis has worked with the IRA Financial Group to establish his “checkbook control” IRA LLC, he would have been told that he could have used an LLC to make an investment in the LLC business, although, the investment would have to be 100% passive and he would not have been able to be involved in the business in any way, including earning a salary.

Conclusion

In light of Swanson, FSA 200128011, and TC Memo. 2013-245 the establishment and funding of a new LLC by an IRA for purposes of making IRS approved investments will not be considered a prohibited transaction under Internal Revenue Code Section 4975.

For additional information on the Self-Directed IRA LLC structure, please contact one of our IRA Experts at 800-472-0646.

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Sep 08

What Are the Tax Filing Requirement for UBTI?

In computing UBTI, a specific deduction of $1,000 is permitted. If a Self-Directed IRA LLC has gross UBTI of $1,000 or more during its fiscal year, it must file a completed IRS Form 990-T to report such income and pay any tax due. The Form 990-T is due at the same time as the Form 990, however, if the Self Directed IRA LLC expects its annual UBIT (after certain adjustments) to be $500 or more, then it must make estimated tax payments throughout the year. The Form 990-T is not subject to public disclosure like the Form 990.

What Are the Tax Filing Requirement for UBTI?

Please contact one of our Self Directed IRA Experts at 800-472-0646 for more information.

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Aug 21

Purchasing Tax Liens with a Self-Directed IRA LLC

It’s a little-known fact that tax liens can be purchased with retirement account funds. By Self-Directing your IRA LLC investments into tax liens, your profits are tax-deferred back into your retirement account. More importantly, if you have full checkbook control over your Self-Directed IRA, the purchases can be made on the spot as fast as you can write a check. Tax Liens have been a lesser known and underappreciated money-maker, however learning how they can magnify your earnings in a tax-deferred IRA LLC will make them one of the soundest investments in your retirement account.

The purchase of tax lien certificates is a surprisingly safe investment. The transaction is fast and its characteristics make tax liens a perfect investment for the individual with full checkbook control of an IRA Financial Group IRA LLC. In fact, the use of a Self-Directed IRA LLC is one of the most tax efficient ways to finance your tax lien purchase. IRA Financial Group’s IRA LLC allows investors to participate in a wide range of investment vehicles including, but not limited to tax liens, real estate, mortgages, franchise, notes, stocks and mutual funds, partnerships, etc.

These unique IRS approved structures are created by IRA Financial Group’s in-house tax and ERISA professionals who personally customize your account structure to suit your needs. Only a handful of institutions are skilled in these specialized account structures and IRA Financial Group is the “gold standard” for Compliance, Leadership, Customer Service, and Technological Innovation.

Facts & Opportunities Surrounding Tax Liens

Real estate has long been considered one of the best (and safest) investment opportunities for both the large and small capitalist. Savvy investors know that the trick to making money in a downward spiraling market is to purchase properties for a fraction of their value. The question is…How? Many are finding the perfect answer in the high-profit possibilities of investing in Tax Lien Sales.

Purchasing Tax Liens with a Self-Directed IRA LLCWhen a property owner falls behind on their taxes, failing to pay for one or more years, the local taxing authority has the legal right to place a lien or repossess the property and sell it at auction to recoup the lost tax revenue. How long local authorities wait to seize individual properties, and how much they allow to be owed on it before one of these events is up to the lien laws in their particular area. In many cases properties may be acquired for a few thousand dollars, regardless of how much it’s actually worth! Similarly, paying off the lien on others may cost more than the house or land is worth. A savvy investor takes the time to research each property carefully prior to sale day.

Tax Lien Sales

Tax lien sales usually happen at public auctions once or twice a year, depending on the area in which it is located, and how many properties the government may seize annually for back taxes. Larger urban areas may hold monthly auctions, while smaller rural ones might only have one a year.

Types of Tax Liens

There are two types of tax lien sales through auction: the tax lien certificate; and the tax lien deed. Both can be a safe yet profitable opportunity for investors with checkbook control.

Tax Lien Certificate sales offer the delinquent homeowner one last chance to retain ownership of their property, by using third-party investment money to pay off the taxes and give them a bit more time to collect the money needed to pay their debt without the risk of losing their home. When an investor bids on a tax lien certificate, he is in essence agreeing to loan the homeowner the money needed to pay all taxes due. The homeowner, in turn, agrees to pay back the tax lien certificate holder – with interest – by a specified date. If the homeowner fails to pay the debt on time, the deed to the property is transferred to the investor for the amount paid on the taxes. Either way the investor makes a profit: either on the interest he earns on the loan; or by obtaining the property for a fraction of its value through the tax lien sale, and then reselling it.

Tax Lien Deed sales are handled a bit differently, since the investor is actually bidding (or buying), the complete property at the time of auction, with no responsibility to give the homeowner more time to pay his/her tax debt. Once the selling price is approved, the deed is automatically transferred to its new owner, giving the investor full reign as to what to do with the property next: renovate it; sell it as-is; or raze the existing house and build anew.

Investors usually pay more for properties in this type of tax lien sale, which may lower their profit margins compared to the acquisition of tax lien certificate properties. But, many investors prefer outright purchases to eliminate problems with current homeowners. Either way, investing in tax liens is a profitable and easy way to enter the real estate market in virtually any area.

How Much Money Can I Make and How?

1. Double Your Money Quickly. A Self-Directed IRA LLC can be supercharged when you buy tax lien certificates. Example: A tax lien certificate can earn up to 16% annually in your Self-Directed IRA. When you buy tax lien investments you generally receive the amount invested plus interest within 12 months. If you continue to reinvest in tax liens year after year at 16%, you can double your money in about 4.4 years. Only a Self-Directed IRA LLC can preserve this 16% return, as traditional IRAs do not invest in tax liens.

2. Your Money Grows Tax-Free. By buying tax liens in an IRA Financial Group Self-Directed IRA LLC, you can avoid all taxes until the money invested is withdrawn from the IRA, which is usually around age 59 1/2. The money can be invested once, twice or a thousand times and continue to grow tax-free, so long as it is not withdrawn for personal use. If you use a Self-Directed Roth IRA LLC, your investment will grow tax-free and you can withdraw the funds tax-free once you reach the age of 59 1/2.

3. The Flexibility to Buy Time Sensitive Investments. IRA Financial Group’s Self-Directed IRA LLC allows you to carry a checkbook that is tied to the account. This gives you incredible freedom to fund the investment at a moment’s notice. In this arrangement, you can buy tax liens with the stroke of the pen, without a custodian or other bureaucrat saying no or otherwise trying to slow down the process.

Tax liens are backed and leveraged by real estate and guaranteed by the governmental taxing authority. In most states, they are a first lien on real estate, and when foreclosed, they wipe out all junior liens, including mortgages. This allows you to potentially receive a valuable piece of real estate for pennies on the dollar!

Time to Act

Real property has been the cornerstone of wealth for thousands of years. While ill-informed speculators have fled real estate because of the housing bust, intelligent real estate investors are enjoying immense profits by expanding their geographic scope and investing for predictable income.

Why are we significantly less than everyone else and “The best in the business”?

Establish a Self-Directed IRA LLC with IRA Financial Group and have immediate “checkbook control” to make tax lien investments.

Our in-house tax and ERISA professionals will take care of setting up your Self-Directed IRA LLC. Our tax and ERISA professionals are onsite greatly reducing the setup time and cost. You will find that our fee for this service is significantly less than other companies that perform the same or similar services.

Please contact one of our IRA Experts at 800-472-0646 for more information.

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Aug 17

Leading Self-Directed IRA Provider Introduces New Checkbook Control IRA Bitcoin Solution For Retirement Account Investors

Checkbook Control Self-Directed IRA LLC option offers retirement account holders the ability to trade or hold Bitcoins and other cryptocurrency without tax

IRA Financial Group, the leading provider of Self-Directed IRA LLC and Solo 401(k) Plan solutions, is proud to announce the introduction of the Checkbook Control Bitcoin Self-Directed IRA LLC option to all retirement account holders. IRA Financial Group’s Bitcoin IRA solution with Checkbook Control will allow retirement account holders to buy, sell, or hold Bitcoins and other cryptocurrency assets and generate tax-deferred or tax-free gains, in the case of a Roth IRA. “Bitcoins have become a popular investment diversification option for many of our Self-Directed IRA investors in 2017, who are interested in using a tax-efficient manner to buy and sell Bitcoins,” stated Adam Bergman, a partner with the IRA Financial Group.

Leading Self-Directed IRA Provider Introduces New Checkbook Control IRA Bitcoin Solution For Retirement Account InvestorsAccording to Mr. Bergman, IRA Financial Group’s Checkbook Control Bitcoin solution is so attractive to Bitcoin investors because it gives them the control to buy, hold, or sell bitcoins themselves, as manager of the IRA LLC. The primary advantage of using a Self Directed IRA LLC to make Bitcoin investments is that all income and gains associated with the IRA investment grow tax-deferred or tax-free, in the case of a Roth IRA.

IRA Financial Group’s Bitcoin IRA LLC for cryptocurrency investors is an IRS approved structure that allows one to use their retirement funds to make Bitcoin and other investments tax-free and without custodian consent.

IRA Financial Group is the market’s leading provider of self-directed retirement plans. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate, without custodian consent.

Adam Bergman, IRA Financial Group partner, has written six books on the topic of self-directed retirement plans, including, “The Checkbook IRA”, “Going Solo”, “Turning Retirement Funds into Start-Up Dreams”, “Solo 401(k) Plan in a Nutshell”, “Self-Directed IRA in a Nutshell”, and “In God We Trust in Roth We Prosper”. Mr. Bergman is also the founder of The IRA Financial Trust Company, a Self-Directed IRA custodian.

To learn more about the IRA Financial Group, please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

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Aug 10

How Long Does it Take to Set Up an IRA Financial Group Self-Directed IRA?

The IRA Financial Group will take care of setting up your entire Self Directed IRA LLC structure in a matter of days. Our in-house tax and ERISA professionals will work with you directly to customize a structure that satisfies your tax and investment goals.

How Long Does it Take to Set Up an IRA Financial Group Self-Directed IRA?The whole process can be handled by phone, email, fax, or mail. Our expert tax and ERISA professionals are on site greatly reducing the set-up time and cost. Our in-house retirement tax professionals will complete all the necessary IRA rollover or transfer paperwork and assist you in transferring your funds to the new passive custodian so that your funds will be available for investment in a matter of days. Typically it takes anywhere between 7 and 21 days for your funds to be transferred to your new “Checkbook Control” Self Directed IRA LLC. In most cases, we are able to complete the IRA LLC facilitation aspects of the transaction within a few days; however, the transfer of funds from one custodian to another can take some time depending on the financial institution and the type of assets being transferred. Most importantly, you will find that our fee for this service is significantly less than other companies that perform the same or similar services.

To get started or to learn more about the Self-Directed IRA LLC Structure, please contact one of our IRA Experts at 800-472-0646.

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Aug 01

Why Should I Establish a Self-Directed IRA?

A Self-Directed IRA LLC will offer you the ability to make traditional (stocks, mutual funds) as well as non-traditional investments (real estate, precious metals, etc.) tax-free and without custodian consent. Tired of seeing all your hard earned retirement assets lose value in the stock market? Worried that the value of your IRA or 401(k) will take a dive over the next four years? Protect and better diversify your retirement portfolio with a self-directed IRA LLC. Take control of your retirement future and have the opportunity to make the investments you want when you want them.

Why Should I Establish a Self-Directed IRA?With IRA Financial Group’s Self-Directed IRA LLC, a special purpose limited liability company (“LLC”) is created which is owned 100% by the IRA and managed by you or any third-person. The advantage of using an LLC to make the investment is that an LLC is treated as a passthrough entity for tax purposes meaning the owner of the LLC would be subject to the tax not the LLC itself. However, as per Internal Revenue Code Section 408, IRAs are exempt from tax. As a result, in most cases, all income and gains generated by the IRA LLC would flow back to the IRA tax-free. In addition, the LLC investment vehicle allows the IRA owner to take more control of his or her retirement funds by keeping the IRA funds at a LLC bank account and not with a far away custodian offering “checkbook control” and greater flexibility to make investments quick and without delay.

With an IRA Financial Group Self-Directed IRA LLC, work with our in-house retirement tax professionals and gain the ability to protect your retirement future from a turbulent stock market or future inflation by having the opportunity to re-allocate your retirement portfolio into different asset classes, such as real estate, precious metals, private business, peer-to-peer lending, foreign currency or options. Don’t let Wall Street blow your retirement – diversify your retirement portfolio with a self-directed IRA LLC.

Call us at 800-472-0646 and learn more about the benefits and tax advantages of establishing a Self-Directed IRA LLC with “Checkbook Control”. Take control of your retirement funds now! It’s quick & easy and we can have your Self-Directed IRA LLC structure established in days.

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Jun 29

Top Self-Directed IRA Provider – IRA Financial Group – Announces New Self-Directed IRA Prohibited Transaction Review Service

New self-directed IRA prohibited transaction review service will be offered to all IRA Financial Group clients

IRA Financial Group, the leading provider of “checkbook control” self-directed IRA and solo 401(k) Plans, announces the introduction of a self-directed IRA prohibited transaction review service. IRA Financial Group’s new self-directed IRA prohibited transaction review service will be available to anyone seeking expert consultation on the complex prohibited transaction rules surrounding Internal Revenue Code Sections 408 and 4975. “Understanding how the IRA prohibited transaction rules apply to a self-directed IRA transaction is crucial in order to stay out of any IRS problems,” stated Adam Bergman, a partner with the IRA Financial Group.

Top Self-Directed IRA Provider - IRA Financial Group - Announces New Self-Directed IRA Prohibited Transaction Review ServiceThe Internal Revenue Code does not describe what a Self Directed IRA or Solo 401(k) plan can invest in, only what it cannot invest in. Internal Revenue Code Sections 408 & 4975 prohibits Disqualified Persons from engaging in certain type of transactions. The purpose of these rules is to encourage the use of retirement accounts for accumulation of retirement savings and to prohibit those in control of retirement accounts from taking advantage of the tax benefits for their personal account. “The partners at the IRA Financial Group have spent thousands of hours reviewing all available IRS materials and case law on all facets of the IRS prohibited transaction rules and have developed a platform for advising clients on the rules,” stated Mr. Bergman.

IRA Financial Group is the market’s leading provider of self-directed IRA LLC and Solo 401(k) plans. IRA Financial Group has helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate without custodian consent.

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646. To learn more about establishing a self-directed IRA account with the IRA Financial Trust Company please visit http://www.irafinancialtrust.com or call 800-472-1043.

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Jun 26

Swanson Tax Case Explained

IRA Can Own 100% of a Newly Established Entity and be Managed by the IRA Holder and Not Trigger a Prohibited Transaction

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

The idea of using an entity owned by an IRA to make investments was first reviewed by the Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996).

Underlying dispute.

The underlying facts involved James Swanson (the taxpayer’s) combined use of two entities owned exclusively by his IRAs to defer income recognition.

James Swanson was the sole shareholder of H & S Swansons’ Tool Company, an S corporation that builds and paints component parts for domestic and foreign equipment manufacturers. Following the advice of tax counsel, Swanson arranged in 1985 for the establishment of Swansons’ Worldwide, Inc. (“Worldwide”), a Domestic International Sales Company (“DISC”). A DISC is a domestic corporation, usually a subsidiary, that is typically used to defer tax on income generated by the entity.

Mr. Swanson appointed Florida National Bank as trustee and custodian of IRA #1, who retained the power to direct its investments. Mr. Swanson then directed Florida National to execute a subscription agreement to purchase 2,500 shares of Worldwide original issue stock. The shares were issued and IRA #1 became the sole shareholder of Worldwide.  Mr. Swanson then engineered a similar transaction with a second IRA at another bank.

The IRS Attack

The IRS issued a notice of deficiency to Mr. Swanson in June 1992. The IRS stated that prohibited transactions had occurred causing IRAs #1 and #2 to be terminated. The IRS made the following arguments:

  1. Mr. Swanson is a disqualified person within the meaning of section 4975(e)(2)(A) of the Code as a fiduciary because he has the express authority to control the investments of IRA#1.
  2. Mr. Swanson is also an Officer and Director of Swansons’ Worldwide. Therefore, direct or indirect transactions described by section 4975(c)(1) between Swansons’ Worldwide and IRA #1 constitute prohibited transactions.
  3. Mr. Swanson, as an Officer and Director of Worldwide directed the payment of dividends from Worldwide to IRA #1.
  4. At the time of the purchase of the Swanson Worldwide stock, Mr. Swanson was a fiduciary of his IRA and the sole director of Swansons’ Worldwide.
  5. The sale of stock by Swanson Worldwide to Mr. Swanson IRA constituted a prohibited transaction within the meaning of Section 4975(c)(1)(A) of the Code.

Mr. Swanson’s Position in Response to the IRS

Mr. Swanson took the position in their Tax Court petition that no prohibited transaction had occurred. Their position was that since the Worldwide shares issued to IRA #1 were original issue, no sale or exchange occurred. Also, they stated that as director and president of Worldwide, Swanson engaged in no activities on behalf of Worldwide that benefited him other than as beneficiary of IRA #1. Mr. Swanson made similar points with respect to IRA #2.

The IRS Concedes the Prohibited Transaction Issue.

The IRS conceded the prohibited transaction issue in the Swanson case on July 12, ’93 when it filed a notice of no objection to an earlier motion by the Swansons’ for partial summary judgment on that issue.

Mr. Swanson sought litigation costs against the IRS on the Prohibited Transaction Issue

The Tax Court Rebuffs IRS Arguments on IRA Prohibited Transaction Issue and Imposes Litigation Costs.

The IRS argued that its litigation position with respect to the IRA prohibited transaction issue was substantially justified. The Tax Court disagreed with the IRS’ position, finding that it was unreasonable for the IRS to claim that a prohibited transaction occurred when Worldwide’s stock was acquired by IRA #1 for the following reasons:

  1. The stock acquired was newly issued. Before that time, Worldwide had no shares or shareholders. A corporation without shares doesn’t fit within the definition of a disqualified person under the prohibited transaction rules. As a result, Mr. Swanson only became a disqualified person with respect to IRA #1 investment into Worldwide only after the Worldwide stock was issued to IRA #1.
  2. It was only after Worldwide issued its stock to IRA #1 that Mr. Swanson held a beneficial interest in Worldwide’s stock. Mr. Swanson was not a “disqualified person” as president and director of Worldwide until after the stock was issued to IRA #1
  3. The payment of dividends by Worldwide to IRA #1 was not a self-dealing  prohibited transaction under Internal Revenue Code Section 4975(c)(1)(E). The only benefit Mr. Swanson realized from the payments of dividends by Worldwide related solely to his status as beneficiary of IRA #1 which is not a prohibited transaction.
  4. It was only after Worldwide issued its stock to IRA #1 that Mr. Swanson held a beneficial interest in Worldwide’s stock. Therefore, the issuance of stock to IRA #1 did not, constitute a prohibited transaction.
  5. It was only after Worldwide issued its stock to IRA #1 that Mr. Swanson held a beneficial interest in Worldwide’s stock. Mr. Swanson’s only benefit would be as beneficiary of the IRA which is not a prohibited transaction.

The Tax Court reached similar conclusions with respect to IRA #2.

THE TAX COURT AGREED WITH SWANSON THAT THE IRS ARGUMENT THAT AN IRA CANNOT OWN A NEW ENTITY TO MAKE AN INVESTMENT IS A FRIVOLOUS POSITION THAT SHOULD BE SANCTIONED AND SUBJECT TO LITIGATION FEES

“We must apportion the award of fees sought by petitioners (Swanson) between the DISC (IRA) issue, for which respondent (IRS) was not substantially justified”
-Tax Court in Swanson V. Commissioner 106 T.C. 76 (1996).

What did we learn from the Swanson Tax Court case?

An IRA can own an Interest in a New Entity managed by the IRA holder

The Swanson case helped establish that an IRA holder is permitted to establish a new entity wholly owned by his or her IRA in order to make IRA investments.  The Swanson case makes it clear that only after the IRA has acquired the stock of the newly established entity does the entity become a disqualified person.

An IRA Holder can manage the newly formed entity owned by the IRA

The Swanson case makes it clear that an IRA holder may serve as manager, director, or officer of the newly established entity owned by his or her IRA.   The Tax Court held that Mr. Swanson was not a “disqualified person” as president and director of Worldwide until after the stock was issued to IRA #1. In other words, by having the IRA invested in an entity such as an LLC of which the IRA owner is the manager, the Swanson Case suggests that the IRA holder can serve as manager of the LLC and have “checkbook control” over his or her IRA funds.

The Tax Court in Swanson made it clear that it was only after Worldwide issued its stock to IRA #1 that Mr. Swanson held a beneficial interest in Worldwide’s stock.  Therefore, the Tax Court is arguing that only once the IRA funds have been invested into the newly established entity does the analysis begin whether an IRA transaction is prohibited.  Said another way, the Tax Court is contending that the use of an entity owned wholly by an IRA is not material as to whether a prohibited transaction occurred.  The use of a wholly owned entity to make an investment is essentially no different if the IRA made the investment itself with respect to the prohibited transaction rules.

For more information about this case and others, please contact an IRA Expert @ 800.472.0646.

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