All Forum Posts by: Ebere Okoye

Dave T is right - Another alternative is selling the property through an installmental sales agreement so that the profit is realized over a number of years if he does not need the funds immediately

“Prohibited Transactions"
Generally, a prohibited transaction is any improper use of your traditional IRA account or annuity by you, your beneficiary, or any disqualified person.
Disqualified persons include your fiduciary and members of your family (spouse, ancestor, lineal descendant, and any spouse of a lineal descendant).
The following are examples of prohibited transactions with a traditional IRA:

Borrowing money from it.
Selling property to it.
Receiving unreasonable compensation for managing it.
Using it as security for a loan.
Buying property for personal use (present or future) with IRA funds."

Your IRA may not buy an investment from or sell an investment to a disqualified person as defined by Internal Revenue Code Section 4975. To do so is known as "self dealing."

This means that investing in an arm length transaction like you have stated above is not a prohibited transaction. You can read more on recent articles I wrote on Bigger Pockets at http://www.biggerpockets.com/articles/3359-self-directed-iras---tax-free-real-estate-investing. If you want more in depth info on SDIRA, you can watch my recent webinar on this topic at: http://thewealthbuildingcpa.com/index.php?option=com_content&view=article&id=87

This is ok to maintain history as long as you originally set up the LLC right by not using your home address or yourself as the resident agent. These are asset protection busters. You would only need to update your operating agreement for the new brokerage office.

Either set up a Multimember LLC and have the foreign investor as the limited partner which means they will have tax obligations in the U.S. Other alternative is to be the 100% and treat the foreign investor as a silent partner and allocate 50% of after tax profits to them

Consider a 1031 exchange or an installmental sale contracts. These strategies have their own rules so please consult a with a Real Estate CPA or a tax advisor

If the goal is not to issue 1099's at tax time, then it make sense to keep everything under the current association. There are other reasons though that it may make sense to form a new LLC for the property management. Legal, tax implication, business analysis, etc. are some of the reasons why you may need to consider separating the businesses.

Also you may still be required to issue 1099's anyway under the association. This is something you could hire a payroll company to handle.

This would be considered an installment sale. The 18k income will be realized income based on the principal payment every year. So if in the first year, you receive $10k of the $90k, then your income for the first year will be $10k/$90k * $18k. See IRS link for more information http://www.irs.gov/publications/p537/ar02.html

I usually advise my clients that they can pretty much use equity stripping and insurance to address the above issues without having to create multiple LLC's. Right now, the lawyer I work with in MD charges $450 to put a lien on a property and it can be the same lien put on multiple properties. It makes sense to have a management llc and then a holding LLC that puts liens or notes on all the properties. The other alternative is to get a good umbrella insurance policy.

I always tell my clients, we worry a lot about lawsuits depleting our funds but pay little attention to TAXES which is guaranteed to deplete your funds EVERY year without proper planning. Just a food for thought.

I think this is great because you have already factored in your UBTI which is at about 35%

A land trust is some cases are disregarded entities so will still need to pick up income in tax return. I would say go the LLC route if you will have passive activity losses but if you cannot deduct that or you will have passive income, then I can see your point on the C corp but proceed with extreme caution