QUESTION:
I have an opportunity to invest in a car wash in CA. I will be partnering with a local, experienced car wash operator who will be responsible for the car wash operations. My role is to provide equity and oversight. My goal is to participate in the revenue upside.
My understanding is that Business Income will be taxable, but the debt-financed income will not be taxable. For the record, a seller financed interest-only loan is being offered.
I want to check with you first make sure that I am headed in the right direction here and this is feasible through my Solo 401k.
ANSWER:
1) Please note that if you make an equity investment (via the Solo 401k) in a business that provides goods/services and is taxed as a pass through entity (e.g. S corp, LLC, etc.) the gains that are attributable to that investment will be subject to UBIT. Please see more at the following link:
