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Tax, SDIRAs & Cost Segregation

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  • Boyds, MD
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Forming LLC with SD 401K

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  • Boyds, MD
Posted Jun 2 2014, 17:34

Can an SD 401K be used to establish an LLC with another non-disqualified individual? LLC would be funded say 40/60 for example purposes, between 401K trust and non-disqualified individual. Apportioned income, gains or losses from the business operation would be allocated to the 401K trust. I would be 100% passive in all activity of the LLC. No leverage would be used.

I've read "The purchase of a business operated via an LLC or partnership will POTENTIALLY trigger the Unrelated Business Taxable Income rules under IRC 512 and a corresponding tax of approximately 35% would be applied"

What I cannot find are the actions or measures one should take to eliminate or avoid the potential trigger?

Thanks

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