Checkbook Control IRA LLC Recent U. S Tax Court Case – McNulty v. Commissioner, 157 T.C. No. 10 (Nov. 18, 2021)

Filed November 18, 2021 (ANDREW MCNULTY AND DONNA MCNULTY, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent), a taxpayer’s self-directed IRA was deemed as involved in a taxable distribution because the tax payer (McNulty) stored at her home the American Eagle gold coins purchased through her IRA owned LLC ( IRA LLC, also known as a checkbook IRA).

Essentially, an IRA LLC facilitator, who is named in the court case along with the self-directed IRA custodian, mistakenly advertised to IRA LLC investors that they could store the precious metals including American Eagle coins at their home without tax consequences or penalties since they were owned by the IRA LLC (checkbook IRA).

It is important to note that while the IRA whether through the IRA or the IRA LLC and the solo 401k rules allow for investing in precious metals including American Eagle gold coins (visit here for a list of allowed metals in both an IRA and a solo 401k), they must be stored with a depository taking institution such as a bank. For guidance on storing requirements See IRS Private Letter Ruling 200217059

With respect to the impact of the McNulty court case on cryptocurrency held in a solo 401k and/or IRA LLC, it can serve as good reminder of not storing your cryptocurrency wallet at your home as it can run the risk of resulting in a taxable distribution.

VIDEO SLIDES: https://www.mysolo401k.net/wp-content/uploads/2021/12/McNulty-Cant-Store-IRA-IRA-LLC-or-Self-Directed-Solo-401k-owned-Metals-or-Cryptocurrency-at-Home.pdf

While the precious metals or coins may not be stored at home, some options for storing precious metals include a safety deposit box at the bank or credit union or a storage facility such as Delaware Depository.

Options for storing cryptocurrency do not include your home or personal residence as this runs the risk of a taxable distribution at minimum.

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About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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