Setting up my non IRA LLC. Trying to disern if there are any tax advantages. I'm primarly creating the LLC as a firewall between my trading and my other finances. I just don't trust any Forex dealer saying that you can't loose more than your account. I figure the LLC is a good firewall, since if it gets into trouble, I'll just let it die. But, are there any advantages that I can take for tax write off for a company that has not active income? Such as a business meeting trip to meet with another owner of the LLC that is quite a distance a way? (My in-laws live near the Ocean, and it would be great to write off the cost of the milage, along with the hotel bill, it might be worth giveing him a few hundred units if I could do this)
Sounds like you are doing a good thing for your family and charity. Pretty complicated setup. Have you consulted with a tax atty? Would be nice to have their guidance and blessing esp if you get audited/investigated by the feds. Let us know how it progresses.
The LLC is set up, and has been trading now for about a month. I'm still waiting on my 501c determination letter from the IRS. These can take up to 6 months. No, I haven't contracted an attorney for this specifically. My decitions were base on IRS rullings, IRS pubs, and a few court case rulings. I've determined, that yes there is risk, but it is well worth it. I've documented the bases of my decitions, I'm reporting the info to the IRS, so they can't get me on fraud. I also beleive, as long as I stick to the rules and act appriately, the IRS should leave me alone for the most part. (Flying low, I believe can ruce some risk, nothing in the transactions that I've performed should create an immediate red flag, this is the best way to live life I've found) I'll keep this board posted of any future development. But right now, the only thing that is pending is the 501C status letter. The rest is pretty much on autopilot for now.
Here's an update: Everything is set up, and running fine, as far as the IRAs. I've filed for my 501C status for my charity, and am still waiting on the IRS to give me their ruling. Right now I am thinking about opening up Educational IRA's for my nieces that will in turn invest into my IRA LLC...... The only problem is, that my nieces live in Washington State and I live in Maryland. Which with that said, I believe might cause further complications in legalities, since LLC Units are considered securities. Anyone here have experience in this matter?????
Holy shit. You poor dumb bastard. Please read this carefully as it pertains to how hard you are going to be f'd. I have made millions as a trader and gone down the same path as yourself, trying to find a way to save some taxes. However our paths diverged when I went to a top tier global CPA firm for my advices and also studied the pertinent sections of the tax code directly, as in the library directly. Your IRA cannot buy any interests in your LLC. If the IRS find out about this your IRA and your Wife's and your other relatives IRA's will all be disqualified and eliminated. Basically, the IRA's will be taxed fully at the trust rate which exceeds the maximum individual rate, penalized the 10% for early withdraw and fined additional dollars. On top of that they will charge a very high interest rate for each year this went on, basically carrying forward the expenses you would have owed so if all of the above fee's come to 100k and this occured over a 10yr period they will charge interest at 12% per annum on top of it al. You will also most likely be criminally prosecuted. I have a better idea for you. Just stop paying taxes. You will get in less trouble. Let me iterate please...If you just stop paying taxes then when they catch you they will make you pay all of the back taxes and fine you and prosecute you, but the will not disqualify your IRA money so at least your family will be spared somewhat. Now I will reiterate that if your IRA or ANY IRA or pension which you have ANY control over invests in ANY company you control (regardless of how it is structured) then you have created a prohibited transaction and even if your IRA put $1 and Your daughter put $1 then all of your/their IRA's (even with other companies, brokers, etc) will be f's as per above. But please don't take my word for it spend 50 cents of all that money you are making on some half-baked 2 bit accountant and they will tell you the same. Seriously if you want good advice for a good value contact Bob Green at greentradertax.com (we are not affiliated in any way). He has a good reputation amongst traders and I guarantee he will tell you the same story i just did. I'll bet he will even give you a free consultation. It will only take him a few seconds to realize how much you are f'ing your whole family. If you want a second opinion im me and I'll give you the name of my CPA firm. Sorry you wasted all of your time doing this for nothing "washing machines work hard", well almost nothing (you can still contribute to your plan from your LLC and trade ithe plan). The LLC I am creating will have the following entities that will buy into it. My IRA owns 60% of the LLC My Wife's IRA Owns 20% of the LLC My Daughter's Ed IRA owns 5% of the LLC My Son's Ed IRA owns 5% of the LLC The Charity that I am forming owns 10% of the LLC The trick here is that according to the IRS, IRA's are actual enties unto themselves, that I can not profity from until I retire, if I do, the IRA status ends.
JoeT is right... Your IRA will be diqualified if any income from it or any expense it pays inures currently to you.
make sure you have letter in hand before they come knocking :eek: ps. have you look into 'stretch IRA'? http://moneycentral.msn.com/content/Taxes/Taxshelters/P33760.asp
That's the secret. The LLC is set up so that only IRA enties and Charities can invest into it. In no way can it inure me, or my family..
there is an exception because of case law that you can invest personal money at the exact time the ira invests in the llc but personal money cant be done before hand or after the llc has been set up. but like i said at the exact same time. also there has to be very specific language in the llc bylaws and article that the llc is governed by the rules of IRA. be carefull. pat rogers