What can a Roth IRA own?

first, people should actually know that you know a few taxes. (grin)

But to the question. Why the extra step of an LLC? Nothing to be gained.

Finding a trustee for such a ROTH IRA will be the tricky part, for the plan has to be IRS approved to say the least. I doubt one's local bank could help, not even a large one with a fancy trust department.

Perhaps a full service brokerage house could be consulted.

ChEAr$, Harlan

True, there are a few taxes I know well. But just a few.

The reason I was given was the limited liability. But as long as the investments are corps or limited partnerships, that problem should not exist.

I think you have hit the hammer on the thumb here. This sounds like a roll-your-own trustee situation with high fees. Where does one find the IRS approval documentation? I'll inundate him with paper and give him a month of reading.

An equally large issue is the avoidence of self-dealing in such a plan.

Dick

(snipped.

I'm quite sure that IRS has not aproved any prototype plan for quite this situation. But there are plans for owning securities in any companies, so that is not the problem. Finding a willing custodian/trustee is the problem.

Self dealing would be no problem just as long as he or any company he controlled had no dealings with those selected. After all, it's just ownership of stock which wouldn't in itself help one of those companies.

ChEAr$, Harlan

p.s. just watched a show about the Cubs, and everyone interviewed referred to not IF the Cubs ever win the world series, but WHEN.

Given your past comments I just wonder; IF I wound up with two tickets to game seven and offered you one, would you take it?

Where are the qualifications and rules for being a custodian?

This question was asked of me by an accountant. Based on the above statement, am I correct in inferring that he could not be the accountant compiling monthly financials and preparing tax returns for companies in which his Roth had invested even if he exercized no management functions?

Dick

And now to the non-tax-related delusions of mi amigo:

Next time change the channel! ;)

I suspect these interviews were held in the vicinity of the garbage can whose flames were providing warmth for the interviewees while they passed around a bottle of fortified wine. My answer would be that any specific NL team has, by random chance, a 5/16th chance of being in the playoffs, a 1/8th chance of winning the playoffs, and thus an annual 5/128th (.039036) chance of even being in the World Series. That is a 60% probability over the next 23 years for any specific NL team. And for winning the WS, it's

36.47% over the next 23 years.

Considering the Chicago Chokers of Wrigley Graveyard infamy have had only 16 winning seasons over the last

60 years (and six of those were in the Durocher years (1967-1972), I would cut that probability of them being in a WS at 30% and winning it at 15%. Of course, these odds would change if they moved out of that cracker jack ballpark and into a major league ballpark. Unless that happened, I'll lay a 750ml bottle of Jack Daniels Single Barrel against an equivalent bottle of your choice of Scotch that Windy City Whuses do not win a WS by 2030.

I expect the only Major League team in Chicago, YOUR Chicago White Sox, will win two more World Series by

2030.

Harlan, I would be honored to attend any baseball game with a valued colleague. I would accept the ticket and attend UNLESS I had to sit near Commissioner Kevorkian! I would, of course, root for the AL team - even if it was Darth Vader's contempable Bronx Street Urchins.

Best regards,

Dick

Even if it can, why? At a paltry $5k/year, it will take some time to make a significant investment. Even if it is a conversion from a Traditional IRA or a change of investment from an existing Roth, is this really the best retirement vehicle for the individual?

If the investment in local small businesses is a good one, why needlessly complicated it with the current and potential future restrictions of a Roth, especially when one knows from the outset that one is pushing the envelope of the rules for same.

-Mark Bole

Mark Bole wrote: ...

I would venture to hazard ( :) ) a guess the client is attempting to make a tax shelter in the hope one or more of these pays off big down the road?

Independence in thought and action.

I'm quite sure that IRS would not approve of this arrangement, because he does have a financial interest in companies his self directed ROTH might buy.

I'm wondering also whether or not the AICPA might have some strictures and prohibitions on the subject. Eh?

(most intervening comments deleted because of bias of the writer.....!) grin)

EgaD! Do you realize how OLD you'll be by then?

Time will tell. In fact, as Groucho said, "Time flies like an arrow, but fruit flies like bananas."

Was hoping you would be the winner of the extra ticket. When it occurs, (not IF), I'll need your address and SSN for the 1099-misc.

Best ChEAr$, Harlan

Hmm, yess... so.... perhaps... this might imply insider trading? (And yes, I know we're not dealing with publically traded companies.)

ChEAr$, Harlan

I have a complete lack of knowledge of IRA custodial issues. My question should have been worded "What does one do to be a custodian?"

I am NOT picking at straws, but everyone with a self-directed IRA who invests in the company for which they work has a financial interest in the investment. Is the case of a contractual accountant that different or would it be the percentage of ownership.

The last time I looked the AICPA rulespaffected only auditors, not bean counters.

Facts are not biases. ;)

Since I am both younger and better looking than you, it is not in your self interest to bring up age.

What a guy! You offer me a ticket, ask if I will take it, and then you want to issue me a 1099? But then most Cub fans can't spell 1099!

Dick

(a bunch snipped here for brevity's sake.

(see below)

they're not MY White Sox.

First of all, a custodian would have to be in charge of authoring or at least implementing such an arrangement. If your friend in accounting can find such a fellow, more power to him.

However to your latter concern. Any company for which I "do the books", i.e. all taxes and financial statement year end, is one in which I do NOT have a financial interest, except for getting paid end of month. But then, I have no interest in investing in a hardware store, convenience store, or much less a plumbing repair business. OR a motors sports enterprise, just a few of the S corporations for which I "do the books".

But if I did have such an interest, e.g. obtaining shares of stock monthly for my services, I would immediately disqualify myself from ever serving in any trustee type relationship, whether as custodian/trustee of an IRA or other. It's bad enough that I have to file their monthly sales tax returns electronically and actually pay their tax liabilities with reference to their checking accounts! that is NOT to my liking.

Younger? I grant you that. But better looking? I doubt that. I look the same as I did at age 50.

yes I can: "ten" "zero" niner, nine! dash miscerlenush!

(See what a Scotch plus Drambuie wild do to you? (grin

Of course with a 1099- misc it will be up to you to determine whether or not it is subject to SE tax.

ChEA$R Harlan

He could spend a lot of money getting a private ruling which _might_ allow it. But I doubt it; the accountant has management influence even if no formal authority. Besides, if his investment keeps the company from going under, some of it flows to him as pay.

Have to give the Scotch time to age, don't we?

Seth

Or to avoid all the tax complications that come with some types of investments?

Seth

Only talking about taxed Scotch whisky in the barrel, which doesn't apply to most of us tax pros. Whisky doesn't age or get better once it's in the bottle.

Slainte!, Harlan