Client has real property owned by her IRA. She personally paid the property tax.
First, can she personally deduct the tax payment? My guess is no because she's not technically the owner.
Next, she wants to reimburse herself for the tax paid by her LLC. I believe that if she does that, the amount is taxable to her.
Am I off base? Thanks.
Definitely no on the question of whether she can deduct.
Paying the tax directly was a no-no. Things like that are known to break the IRA. Nothing can be done by the IRA owner. Typically, a property manager is in the middle and the IRA owner only issues funds from the IRA account. What she did was effectively make an undeclared deposit to the IRA. This is part of the reason such self-directed IRAs are frowned upon by most advisors.
Thanks. I know that a person is allowed to pay some trustee's administrative fees of an IRA, but I wasn't aware of any other expenses of the IRA the beneficiary can pay directly - apparently there aren't any.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.