Self Directed Checkbook LLC IRA 1099-DIV forms

[Gene Mitchell]

I have a self directed "checkbook" LLC IRA. The LLC has a bank savings/checking account as well as a brokerage account to hold funds until they are needed for an alternative investment. The LLC received a 1099-int from the bank as well as a 1099-DIV from the brokerage. According to the custodian, Provident Trust, these 1099s must be addressed on my personal tax return, even though they are for the LLC IRA and no tax would be due. Does anyone know how to do this? TurboTax is no help, and the IRS hotline rep was also no help.

[Brian Eastman]

@Gene Mitchell

You have been provided with incorrect information by your custodian, unfortunately. This is not uncommon. As administrators of IRA accounts and a fiduciary, IRA custodians are prohibited by rule from providing tax or legal guidance, but sometimes in a desire to be helpful an un-trained customer service person will provide what could be construed as such.

If the LLC is a single member entity as it should be, you can simply file away the 1099 forms with your LLC records and forget about them. The tax liability of the LLC flows through to the tax-exempt IRA account, and - if the EIN was obtained properly - the IRS should be aware of this. The IRA custodian will file a 5498, which is all that the IRS requires.

The firm that provided the LLC entity for you should be able to provide more detailed and accurate guidance on such a topic. We certainly do that for our clients.