Yes. The question was brought before the U.S. Tax Court in Swanson v. Commissioner, 106 T.C. 76 (1996). The Court ruled against the IRS and affirmed the validity of the Checkbook Control platform. The IRS acknowledged the Court’s ruling in Field Service Advisory (FSA) 200128011 (April 6, 2001). In that FSA, the IRS stated:
“In light of Swanson, we conclude that a prohibited transaction did not occur under section 4975(c)(1)(A) in the original issuance of the stock of FSC A to the IRAs in this case. Similarly, we conclude that payment of dividends by FSC A to the IRAs in this case is not a prohibited transaction under section 4975(c)(1)(D). We further conclude, considering Swanson, that we should not maintain that the ownership of FSC A stock by the IRAs, together with the payment of dividends by FSC A to the IRAs, constitutes a prohibited transaction under section 4975(c)(1)(E). Accordingly, this case should not be pursued as one involving prohibited transactions.”
Yes. The Self Directed Solo 401(k) is an IRS Qualified Retirement Plan. The Plan itself has already been approved by the IRS.
No. The Department of Labor has stated that that this is a perfectly legal transaction.
Absolutely not. The tax filings for a self-directed IRA are identical to those of a standard IRA. That means that the IRS would never know an individual has a self-directed IRA unless there was reason to investigate the individual for other reasons.
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