When Should You Use an IRA/LLC or Checkbook IRA?

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Welcome everyone to the Directed IRA podcast.
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This is Matt Sorensen, and I wanted to share with you today a special webinar we did for Directed IRA customers and clients at KQS Lawyers about the checkbook IRA for IRA LLC strategy.
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I was joined by Ashley Burr, a senior attorney at the law firm KQS Lawyers, breaking down the structure and how you should be implementing it with your self-directed savings and investing.
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Please enjoy because we are going to talk about a legal strategy associated with your self-directed IRA, the IRA LC or checkbook IRA, I decided to have Ashley Burr.
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She is a senior attorney at the law firm KKOS Lawyers here in our Phoenix office.
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She's joining me for today, and she's going to be doing the legal stuff.
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Yeah.
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Hello, everybody.
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Happy to be here.
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Yeah, I'm a tax and business attorney here at KKOS Lawyers, and my specialty is looking at a client's corporate structure, making sure they're set up best for both asset protection and tax savings.
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When I'm meeting with my clients, I'm taking this comprehensive approach and I'm always hitting retirement.
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Yeah, you can't avoid it.
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You just can't avoid it, especially with the clients that we're trying to serve.
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And so in our law firm, KKOS Lawyers, and we work with many clients that are have accountant-directed IRA, that are customers at KQS Lawyers, you might have another law firm or CPA firm you're working with.
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But what we've gotten really good at is serving that entrepreneurial small business owner, real estate investor who loves also to self-direct their IRA.
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So we want to talk about the most popular strategy and structure someone's using with a self-directed IRA.
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It's called an IRLC or also a checkbook control IRA.
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We're going to go through a number of ways you can structure this.
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All right, well, let's dig into it.
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Before we get into anything, let's share the slides.
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I want to give a disclaimer.
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Our malpractice provider makes us do this disclaimer.
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This is educational in nature, doesn't constitute an attorney-client relationship.
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Seek out your own specific advisors and your specific situation.
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Okay.
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The first thing I just want to get everybody up to pay up to speed here.
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So many of you already have an accountant directed IRA or you understand what a self-directed IRA is.
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But for anyone catching this that's new to this topic, we're talking about your IRA owning real estate, a rental property, crypto, a private company, a startup, SpaceX stock before it went public.
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Okay.
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Now, a lot of people hear that and they're like, well, how can I do that?
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Well, you need to use an IRA provider like directed IRA that lets you invest in these assets.
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They're called self-directed IRA providers.
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Now a lot of people hear that and they're like, well, Matt, I heard that, you know, you said my IRA could own a rental property, like it could receive the income, it can receive the gain when I sell it and I pay no tax.
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And I called up Fidelity where my IRA is, and they said I can't do it.
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Well, that's not because IRAs can't do it.
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That's because Fidelity IRAs can't do it.
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Okay, and we've got a lot of other content on like what the heck is a self-directed IRA to begin with.
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Let's drop that in a link.
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So if any of you are like, whoa, this is going fast, I'm trying to get to the IRA LLC, the topic de jure here.
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So if we if we know what a self-directed IRA is, we're like, all right, now I want to do a real estate deal with my IRA.
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I want to buy that property and flip it and have the gains go back into my IRA.
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I want to own that rental and cash flow, have the rent go to the IRA, the cash flow, have the appreciation go into it.
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That's what we're talking about here with a self-directed IRA.
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So I'm gonna set up a deal that I did, and then I'm gonna have Ashley walk through the IRA LLC structure.
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So let's go here to the slides.
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Um let's just talk about this.
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This was the first property I bought with my self-directed retirement account.
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All right, this was a rental property in Indianapolis.
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It's a three-bedroom, two-bath rental.
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I bought it in 2017 for 85 grand.
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Now, when I bought this property, I had monthly rental income of 950 bucks a month.
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By the time I sold it, I was getting$1,200 a month.
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But that rental income was going to my retirement account.
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All that cash flow was building up in my retirement account.
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Not paying tax.
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This is not going on my 1040.
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All right.
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And then later I ended up selling this property five years later for 184 grand.
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And all of that gain went back into my retirement account.
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No tax.
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I didn't have to do a 1031 exchange or find a replacement property in 180 days and all that.
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Like it just went back into my retirement account.
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And I've actually been private lending this account and the money in this sense, this deal.
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My retirement account owned an LLC, and it was it was called Legend I-N-R-E-L-C.
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I Peter Thiel calls his LLCs after like uh Lord of the Rings, you know, places.
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I don't know if you it's kind of interesting, you know.
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I was like, I need a theme for my LLC names.
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So I did it off of great albums.
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Great, you know, and and of course the Bob Marley Legend album is you know as a favorite.
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So I was looking at Jordan here.
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He's a music guy.
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Yeah, no, I I can almost name a track for track.
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Yeah, great one.
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Yeah, so that's it's a great, it's a great one.
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Um, anyways, so but that LLC actually owned that property in Indianapolis.
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Like on the deed was Legend I-N-R-E-L-L-C.
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That was the name on the deed.
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When I bought the property, that was the name on the contract.
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It wasn't my IRA, but my IRA owned that LLC.
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So let me turn it over to you, Ashley.
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I'll let you explain the IRLC structure, how it works.
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We have some diagrams in the slides here, and we'll be sharing the deck.
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It'll be on the replay page at directed IRA.com/slash webinars.
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Um, but we'll be sharing the slides here.
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All right.
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Ashley, over to you.
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All right.
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And I just kind of want to preface here that I love the directed IRA and KKS lawyers setup.
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Directed's on the fourth floor, right below me, the law firm's on the seventh floor.
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And I think it's incredibly important that if you guys are looking into self-directed IRAs, LLCs, it is so important to talk to an attorney first.
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I have so many clients come to me that they've set up these LLCs themselves, these IRAs without ever talking to an attorney.
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And it's just a lot of cleanup.
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There's a lot of maybe prohibited transactions that have happened.
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And it's just because they didn't get to talk to an attorney first.
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So I love this kind of setup where the clients go to direct it, they need help with an attorney, they get to come right back up to us.
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So always talk to your attorney first.
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And it's not just because I'm an attorney saying that, I just have seen the experience with my clients and it's super important.
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Yeah.
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And I'll say like the fee when you set this up to set up the LLC includes a consult.
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Right.
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You can talk to Ashley or one of the other attorneys at KQS Lawyers.
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Like it's included in that price.
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And we want it to be because we want you to have that conversation.
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I think the one thing when everyone self-directs their IR, particularly when you do an IRLC out of the gate, is it's not that it's complicated.
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You're just new to it.
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Right.
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So you can walk through the deal you're doing with Ashley, make sure it's structured properly for what you're trying to do in your situation, not what your friend did or what you read online or on some freaking TikTok social media account that was BS.
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So we can kind of get specific to your situation and make sure it's done right.
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Exactly.
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And there it's really twofold why you would want an LLC for your IRA.
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Number one, it's for that checkbook control.
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So if you're just making investments with your IRA directly, that means anytime you want to move money to your investments or take money out, you're reaching out to your custodian.
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Your custodian, they have other clients.
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It might take some time for them to get to your own.
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We love you.
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We love you, but it's better for you too.
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Exactly.
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Yeah.
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And it's going to cost a fee.
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Every time you reach out to your custodian, they're going to charge you a fee to move your money.
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So that checkbook control, if your IRA owns this LLC, you're going to be the manager of that LLC.
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You go and set up a bank account.
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You have that complete checkbook control.
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You don't have to reach out to your custodian every time you're moving money in and out.
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You just have that complete control, write out a check, move the money, do whatever you got to do.
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You don't have to wait for anybody's time constraints or pay their fees.
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Yeah.
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And like particularly real estate clients, that's where this strategy started.
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Was we had so many real estate clients, and there's other lawyers that set these up, of course.
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We're the best, but um, but you know, is that that real estate client was the first traditional client.
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A lot of people use IRA LCs for other things.
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We'll talk about like a crypto use case here, but it could be for many things.
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But but real estate's been the common.
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And even me, like that real estate deal I did, I used an IRA LLC structure.
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Like I'm the CEO here.
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I can push the buttons and tell people what to do.
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I know every request that needs to be made.
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I could even waive some fees, you know.
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I use the LLC because it's easier, it's simpler.
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Um, I can take action right out of a bank account.
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I can send more.
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What about?
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I mean, you we'll get clients that are like buying property at auction, you know, or they've got a rehab going where they're cutting a lot of checks and bills, or they got to hire a contractor.
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Just there's just like a lot of convenience with that bank account and just going right out of the LLC.
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Exactly.
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So checkbook control and then that asset protection.
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So the whole point of an LLC is that corporate vow, that imaginary layer of protection.
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When you're buying real estate, I never want you to be on title individually.
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Because if somebody slips and falls on your property, the first thing they're gonna do is hire an attorney.
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The first thing that attorney does is look up the deed.
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Who owns this property?
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Because that's who we're dragging into a lawsuit.
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So if it's you individually, you get personally dragged in.
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That means all of your personal assets are at risk.
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So instead, an LLC owns this property to give you that protection because that LLC doesn't own your personal assets.
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So that principle is the same when we're talking the IRA realm.
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So it wouldn't be you personally on the hook, but it's your IRA that would be on title.
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I don't want some attorney looking up title to a property, seeing an IRA listed as the owner, and they try to drag your IRA into this lawsuit.
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It's just gonna get crazy.
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Instead, I want your IRA to be protected.
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I want an LLC to be on title to that rental.
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So now if something goes wrong, it's this LLC.
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It's not your whole IRA, it's not you on the hook.
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Yeah, and a lot of people have a misconception on the asset protection part because they'll hear, but Matt, I've heard that like IRAs and 401ks are protected from creditors.
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Creditors can't come after your IRA or 401k.
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Well, that's true for your personal creditors.
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So, like, there's laws in the federal bankruptcy code and in states that protect your IRA or 401k in the event of a lawsuit or judgment.
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Like you can file bankruptcy and keep your IRA or 401k in most instances.
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Like you can totally wipe out.
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No judgment or creditor can come and get it.
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But that's creditors against you personally going against your retirement account.
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When it's your retirement account that made the investment and your retirement account that had the liability, it's not protected from itself.
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They could sue the retirement account to get the assets.
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They could also sue you as being the responsible person making decisions for your retirement account if there's negligence or something for the slip and a fall situation.
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So you do leave yourself exposed, even though it's your IRA.
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It could either be the assets in your IRA or yourself.
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So number two reason I love it, asset protection.
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Let's just take that off the table.
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Make sure you're building wealth, your tenants or whatever that could be the potential plaintiffs.
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Let's just not have that risk.
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Yep, exactly.
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And the process of setting up one of these LLCs, it's really not difficult.
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Like Matt said, it's not very different from setting up a regular LLC, but it's just the rules within the prohibited transactions, disqualified parties.
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That's where the consultation is really important.
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So when we're setting up one of these LLCs, let's just assume a single member LLC, that single member is your IRA.
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It's not you.
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So you so pretty simple process.
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You'll set that up with the attorney, get your bank package, you'll go to a bank, which we're typically recommending Titan Bank.
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They're an online bank, they work exclusively with entrepreneurs, super savvy to this industry.
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You can use your own bank, just be careful.
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Sometimes Bank of America, Wells Fargo, they'll say, Hey, in order for you to open up this account, you have to make a hundred dollar deposit.
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Prohibited transaction.
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You wouldn't be able to do that.
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You'd say, hold on, can't do that.
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But directed will be wiring money within 48 hours.
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So the process is super simple.
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Let's pause there.
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That's a good pitfall to bring up.
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We've seen people fall into that.
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When you're opening that bank account for the LLC, remember, you don't own the LLC.
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And like Ashley said, a lot of banks will be like, well, if we're going to open this account, we need an initial deposit.
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And a lot of people are like, okay, well, here's a check for a hundred bucks, or here's a hundred bucks cash of their personal money, or let me just transfer money from my personal bank account over here to this new business checking account.
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That is a primitive transaction.
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Right.
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You don't own that.
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Right.
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That's you personally.
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You're a disqualified person putting money into an LLC your IRA owns.
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The money's got to come from the IRA.
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Any funding that goes into this IRA-owned LLC, it has to come from your IRA.
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You always must use your IRA as a vehicle to get more money into your LLC and to take it out.
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So of course, you guys are going to have your$7,500,$8,000 per year contribution.
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You cannot put that directly into your LLC.
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It has to hit your IRA first, and then you can push it into the LLC from there.
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And then same thing when you're taking your distributions at 59 and a half, don't take them directly from the LLC.
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Send them back down to your IRA first.
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Take an official distribution from the IRA account.
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So always keep in mind that IRA has to be a vehicle.
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So once you set up that bank account, and remember you are the manager.
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And when I set up LLCs, I'm always setting them up as manager managed, which means the manager has all the signing power and control over the entity.
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So even though the IRA owns it, you still have that control because you are the designated manager of that LLC.
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It's very important to reflect on any contracts, agreements, lease agreements, subscription agreements, whatever it is, your LLC must be listed as the purchaser, as the landlord, because it's not you.
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It's not your IRA.
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So when you have these purchase contracts, when you're making an offer on a house, you're going to be signing on behalf of your LLC.
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There's always going to be a signature line.
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You'll sign your name, comma, manager.
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But make sure that's clear.
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That's not you assuming liability.
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You're not personally guaranteeing anything.
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You're just signing because an LLC can't.
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But at the top of any contract, it must be this LLC listed as the purchaser, the investor, the landlord, whatever it is.
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And that helps you stay away from prohibited transaction issues as well.
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Yeah.
00:14:47.759 --> 00:14:51.679
And most people you're dealing with will have no idea that an IRA owns this LLC.
00:14:51.759 --> 00:14:52.000
Right.
00:14:52.159 --> 00:14:57.519
Like they're just going to see XYZ Investments LLC or whatever you wanted to call the LLC, right?
00:14:57.679 --> 00:14:59.919
And then your signing is just manager.
00:15:00.480 --> 00:15:01.600
They don't know who owns it.
00:15:01.679 --> 00:15:04.159
Your manager of the LLC is like president of the corporation.
00:15:04.240 --> 00:15:14.720
It's like, like Ashley said, it's like you have the signing authority on behalf of the LLC to go do the things with the bank account or contracts or leases or sign at closing to buy or sell a property.
00:15:14.960 --> 00:15:20.000
So you have that control, but you have zero ownership personally.
00:15:20.559 --> 00:15:22.799
And this is not hitting your 1040.
00:15:22.960 --> 00:15:23.840
This has nothing to do with you.
00:15:23.919 --> 00:15:25.440
Your IRA owns this LLC.
00:15:25.600 --> 00:15:27.519
There's no tax return for the LLC.
00:15:27.600 --> 00:15:31.519
Because, like Ash said, it's a single member LLC or disregarded entity.
00:15:32.080 --> 00:15:34.080
What do you have to do to maintain it though?
00:15:34.320 --> 00:15:36.320
Like let's just think about that.
00:15:36.960 --> 00:15:41.440
On the IRA side, you'll have your annual account fee for the IRA, because you still have the IRA.
00:15:41.679 --> 00:15:43.279
It owns this LLC.
00:15:43.759 --> 00:15:46.639
And then the LLC will typically have a fee with the state.
00:15:46.799 --> 00:15:46.879
Right.
00:15:50.159 --> 00:15:50.799
We love Arizona.
00:15:50.960 --> 00:15:51.200
Yep.
00:15:51.440 --> 00:15:53.279
Most states are like 50 bucks or so.
00:15:53.600 --> 00:15:54.399
Yeah, it's not too bad.
00:15:54.639 --> 00:15:57.440
California, 800 bucks, sorry.
00:15:57.600 --> 00:15:57.919
Yeah.
00:15:58.240 --> 00:16:04.320
Even if that LLC doesn't make any money, you got to pay a minimum fee of 800 bucks to the state of California.
00:16:04.480 --> 00:16:14.080
But and then that state's important too, which again, consultation with an attorney is important because you shouldn't just pick any state willy-nilly, especially when you're buying real estate.
00:16:14.320 --> 00:16:17.279
It's got to be a sp a state-specific LLC.
00:16:17.360 --> 00:16:20.399
So sometimes my clients will come to me in the very early stages.
00:16:20.559 --> 00:16:22.879
Well, I think I want to own real estate with my LLC.
00:16:22.960 --> 00:16:24.879
Let's just go set it up in California.
00:16:25.120 --> 00:16:28.879
And then I'll ask, well, do you plan on purchasing property in California?
00:16:28.960 --> 00:16:31.440
And they'll say, nope, I just I just don't know where yet.
00:16:31.600 --> 00:16:33.679
I know it won't be California, but I live there.
00:16:33.759 --> 00:16:34.559
Let's keep it easy.
00:16:34.639 --> 00:16:36.240
Let's form it in California.
00:16:36.480 --> 00:16:44.960
Well, if you end up buying property in Arizona, that California LLC, that's not going to protect you in Arizona unless you get it registered here.
00:16:45.039 --> 00:16:48.480
And now you're paying two states to keep an LLC in good standing.
00:16:48.639 --> 00:16:50.159
So that's important to note too.
00:16:50.240 --> 00:16:56.080
When you're buying real estate, the LLC always has to be established in the state that the property is located in.
00:16:56.240 --> 00:17:02.480
With my crypto clients, we can have some fun, maybe a Wyoming LLC for some privacy and coat protection and things like that.
00:17:02.639 --> 00:17:05.759
But when we're talking real estate, it's always going to be state specific.
00:17:06.400 --> 00:17:07.599
Yeah, that's a great point.
00:17:07.759 --> 00:17:16.400
And I think when you're starting that, I think the first takeaway for real estate clients is set up the LLC in the state where you're buying the property.
00:17:16.559 --> 00:17:17.839
It doesn't matter where you live.
00:17:17.920 --> 00:17:18.960
Don't worry about that.
00:17:19.119 --> 00:17:25.440
Now you might be someone that's like, well, man, I might buy in a few stick pro I might buy, you know, real estate in a few states.
00:17:25.519 --> 00:17:28.240
I want to get it going because I need to start making offers.
00:17:28.480 --> 00:17:37.839
Um, and if you're in a state like Colorado or Arizona or states that are really cheap, I'm like, cool, we can start there and we'll register at foreign when you go.
00:17:38.000 --> 00:17:44.400
But if you're in California, like like Ashley said, or some of these other states that are really expensive every year, just wait.
00:17:44.559 --> 00:17:44.799
Yeah.
00:17:44.960 --> 00:17:48.160
Or let's set it up in the state you're most likely to buy a property.
00:17:48.400 --> 00:17:49.279
Right, exactly.
00:17:49.519 --> 00:17:52.640
Um, that as long as that's not also in a very expensive state.
00:17:52.960 --> 00:17:59.200
And it's important too, when you do start making these offerings, make sure you kind of get your stuff together.
00:17:59.440 --> 00:18:12.400
If you think you're going to be using your retirement accounts in an IRA LLC, you don't want to start making offers with personal funds, your personal name, your personal LLCs, and then bring your IRA LLC in later.
00:18:12.559 --> 00:18:15.599
Again, we're skirting around the prohibited transactions.
00:18:15.759 --> 00:18:17.920
So really think about these things and plan.
00:18:18.079 --> 00:18:25.279
If you think you're going to be using retirement money, get that LLC going so you can start using that on any offer contracts and things like that.
00:18:25.920 --> 00:18:32.160
All right, let's talk about if you can go over like, let's say I'm the manager of the LLC.
00:18:32.400 --> 00:18:35.920
What can I or can't I do as manager of the LLC?
00:18:36.240 --> 00:18:36.400
Yeah.
00:18:36.640 --> 00:18:40.960
So as the manager of your LLC, think of it, you're the supervisor.
00:18:41.039 --> 00:18:44.400
You're making sure that your investment is going as planned.
00:18:44.559 --> 00:18:46.319
You can play that supervisor role.
00:18:46.480 --> 00:18:47.680
You just have to be careful.
00:18:47.839 --> 00:18:51.279
You can't really get your hands too deep into that property.
00:18:52.000 --> 00:18:58.400
According to the prohibited transaction rules, you literally cannot pick up a hammer and hammer a picture frame in the wall.
00:18:58.559 --> 00:19:02.720
You can pick out the picture frame, but you have to hire somebody to go put that up.
00:19:02.880 --> 00:19:05.200
So even though you're the manager, be careful.
00:19:05.279 --> 00:19:08.160
You aren't putting any sweat equity into this property.
00:19:08.240 --> 00:19:11.200
You're just managing, kind of think of a general contractor.
00:19:11.279 --> 00:19:14.400
You're just making sure all the moving parts are being put together.
00:19:14.559 --> 00:19:18.880
Um, and then two, make sure you don't pay yourself as a manager.
00:19:19.039 --> 00:19:23.680
Even though you're managing this LLC, you cannot pay yourself any management fees.
00:19:23.839 --> 00:19:31.519
If you hired a property manager and they're taking everything, of course, you can pay them management fees, but never yourself when this is your IRA LLC.
00:19:32.079 --> 00:19:35.119
Yeah, and I think um there is a case, it's on the slides, too.
00:19:35.200 --> 00:19:36.960
It's called Ellis versus Commissioner.
00:19:37.039 --> 00:19:43.519
This was a guy that had an IRA LLC and was paying himself like 30 grand a year as a salary to be the manager.
00:19:43.759 --> 00:19:48.480
He got audited, IRS alleged a primitive transaction, IRS won.
00:19:48.720 --> 00:19:53.200
So it's very clear that you cannot pay yourself a salary.
00:19:53.359 --> 00:19:55.119
We have always restricted it.
00:19:55.359 --> 00:20:06.240
And um, and that's one of the main things I'll say in the IRLC documents, you will have like what walk through the documents, if you will, like what's what's gonna happen that you'll get in the IRLC.
00:20:06.480 --> 00:20:10.880
Um, and let's talk about maybe a couple things that are in those that are different from a regular LLC.
00:20:11.279 --> 00:20:11.759
Of course, yeah.
00:20:11.839 --> 00:20:15.119
So with an IRA LLC, you're gonna be getting this corporate book.
00:20:15.279 --> 00:20:18.880
Within this corporate book, there's gonna be your articles, your EIN.
00:20:18.960 --> 00:20:22.079
That's what you need to take to the bank to open up that bank account.
00:20:22.160 --> 00:20:29.440
You're gonna have your operating agreement, your seals, your minutes, all of your organizational documents comes with the IRA LLC.
00:20:29.920 --> 00:20:35.519
Yeah, and the IRA custodian, directed IRA, you know, in this example, like we're gonna request those documents.
00:20:35.680 --> 00:20:39.200
Like the bank's gonna want most of those documents for the bank account.
00:20:39.440 --> 00:20:43.039
One of the documents in there is called the operating agreement.
00:20:43.200 --> 00:20:52.960
And in that operating agreement, every IRA custodian that allows for IRLCs is gonna have a checklist to make sure that that operating agreement touches on a couple of IRA issues.
00:20:53.119 --> 00:21:03.759
And one of them is that if a disqualified person, you, the IRA owner, is manager of the LLC, are you properly restricted on what you can and can't do when you can't take salary or compensation?
00:21:04.000 --> 00:21:11.680
There's about seven or eight things in the operating agreement that are unique to an IRA LLC that you won't see in a regular LLC operating agreement.
00:21:11.839 --> 00:21:20.640
And the reason I say that is don't go set this up on legal Zoom or on your own using some regular LLC operating agreement.
00:21:20.880 --> 00:21:33.680
We reject those sadly more than we should because somebody paid some other lawyer to do it or did it on some online service thinking that the IRA LLC is just an LLC, they list the IRE as the owner of.
00:21:34.079 --> 00:21:39.359
It kind of is, but the operating agreement for the LLC must have specific restrictions in it.
00:21:39.519 --> 00:21:43.440
So um now you don't have to use a lawyer to do this.
00:21:43.680 --> 00:21:48.079
You don't have to use a mechanic to replace your transmission either, okay?
00:21:48.640 --> 00:21:50.000
Or to fill your own cavity.
00:21:50.079 --> 00:21:51.440
I'm sure you could figure it out.
00:21:51.599 --> 00:21:57.920
But wouldn't it be better to spend an hour with someone that's done it before and has already figured it out and is actually licensed and authorized to do that?
00:21:58.079 --> 00:21:59.759
So um, so we can help you get.
00:22:00.319 --> 00:22:00.559
There.
00:22:00.720 --> 00:22:08.880
It's not just, I think the advice is big as you emphasized earlier, but making sure the documents are done properly is really the next piece that's important.
00:22:09.119 --> 00:22:09.279
Yeah.
00:22:09.359 --> 00:22:12.480
Our goal is keeping you out of hot water with the IRS.
00:22:12.559 --> 00:22:15.759
So that's everything that we're doing, setting up the documents, the advice.
00:22:15.920 --> 00:22:18.880
We're just making sure that the IRS isn't going to come knocking at your door.
00:22:19.119 --> 00:22:19.279
Yeah.
00:22:19.359 --> 00:22:22.160
And the and the law firm does an opinion letter on the LLC.
00:22:22.240 --> 00:22:26.000
It's part of your documents that says this was set up in compliance with retirement plan rules.
00:22:26.160 --> 00:22:27.359
Make sure you operate it this way.
00:22:27.440 --> 00:22:28.640
There's a do's and don'ts guide.
00:22:28.720 --> 00:22:33.599
There's a lot of resources that we're giving you to make sure that you're successful in this structure.
00:22:33.839 --> 00:22:50.480
Because uh Mark, you know, our partner in the law firm, I mean, he's always talking about um how an IRA LLC is kind of like a loaded gun and that like you need to take a gun safety class and to like make sure you're operating it right because you're in control now.
00:22:50.559 --> 00:22:52.079
Like you've got the bank account.
00:22:52.400 --> 00:22:56.480
You're not running the transactions through us where you can be like, oh, you shouldn't do that, you know.
00:22:56.640 --> 00:23:03.839
Not that that's our job, but like, you know, when you have the LLC and the bank account, you can screw something up if you don't know what you're doing.
00:23:03.920 --> 00:23:05.839
So just make sure you're getting educated on it.
00:23:05.920 --> 00:23:08.400
We have all the resources, we're here to help you.
00:23:08.559 --> 00:23:16.799
The the law firm and and Ashley and the attorneys there, they're doing the consult to go over it with you in the first instances, and we're here with you along as it goes.
00:23:16.960 --> 00:23:25.279
Now, my experience with most clients, and I'm I'm curious yours, if you'd agree with, they kind of need that help on the first deal and like, can I do this?
00:23:25.440 --> 00:23:26.000
Can I do that?
00:23:26.160 --> 00:23:26.400
Okay.
00:23:26.799 --> 00:23:28.400
And then they kind of know what they're doing.
00:23:28.720 --> 00:23:28.960
Right.
00:23:29.119 --> 00:23:31.920
It's not like you're gonna be talking to us every time you're doing something.
00:23:33.279 --> 00:23:33.440
Yeah.
00:23:33.599 --> 00:23:43.119
Unless, so yeah, my real estate clients, I would say the the three biggest investments that my clients make with the IRA is real estate, lending, or crypto.
00:23:43.440 --> 00:23:47.519
So a lot of the times my clients will just start up with maybe real estate.
00:23:47.680 --> 00:23:50.559
And so we'll kind of have our consultation very focused.
00:23:50.720 --> 00:23:53.440
All right, this is everything you need to know about real estate.
00:23:53.599 --> 00:23:59.039
But I'll kind of let my client know hey, if you're ever going to pivot into these other investments, let's chat again.
00:23:59.519 --> 00:24:02.480
Certain investments have certain nuances and rules.
00:24:02.640 --> 00:24:06.160
Again, just want to make sure that you're keeping compliance with everything.
00:24:06.319 --> 00:24:10.960
So, yeah, so you're not gonna be reaching out to an attorney every time you invest in a new real estate deal.
00:24:11.039 --> 00:24:15.359
But if you ever run into any nuances and things like that, that's where the support's helpful.
00:24:15.599 --> 00:24:16.160
Yeah.
00:24:16.400 --> 00:24:16.720
All right.
00:24:16.799 --> 00:24:20.720
Well, let's see if anyone has any questions, Jordan, on the IRL LC.
00:24:20.799 --> 00:24:27.599
We've got a couple other structures we'll get into, different uses for the IRLC, something called the multi-member IRL LC.
00:24:27.839 --> 00:24:30.000
Let's see if we can hit any questions out of the gate.
00:24:30.319 --> 00:24:33.440
Yeah, so Michelle's been doing a great job answering a lot of these questions.
00:24:33.519 --> 00:24:35.519
We have about eight uh ready to go.
00:24:35.680 --> 00:24:38.160
So stop me uh when we want to move to the next section.
00:24:38.480 --> 00:24:39.039
All right, let's do them.
00:24:39.279 --> 00:24:46.720
First one, uh, anonymous attendee asks if I have a checkbook LLC in Wyoming, but live in California, can I do staking?
00:24:48.559 --> 00:24:49.039
Of course.
00:24:49.279 --> 00:24:49.839
Yeah, why not?
00:24:50.000 --> 00:24:50.400
Yeah, yeah.
00:24:52.079 --> 00:24:52.480
Easy enough.
00:24:52.880 --> 00:24:55.519
Yeah, staking does not have to be state specific.
00:24:56.319 --> 00:24:56.640
Okay.
00:24:56.880 --> 00:24:58.960
Uh this question is from Jack Evans.
00:24:59.119 --> 00:25:05.039
How is depreciation realized and taken advantage of in an IRA uh for a SF rental?
00:25:05.279 --> 00:25:09.680
Without it, we remove one big advantage of rental property.
00:25:11.359 --> 00:25:12.400
I can answer that.
00:25:14.799 --> 00:25:22.160
I I appreciate the perspective of we have we've removed one benefit of real estate.
00:25:22.799 --> 00:25:24.160
I'm a tax lawyer, guys.
00:25:24.240 --> 00:25:26.480
Like by training, Ashley is too.
00:25:26.960 --> 00:25:28.079
I buy real estate.
00:25:28.319 --> 00:25:30.160
I do not buy it for depreciation.
00:25:31.839 --> 00:25:32.079
Yeah.
00:25:32.319 --> 00:25:38.079
I I think that's uh I I like that's the tax benefits, but here's keep this in mind.
00:25:38.400 --> 00:25:41.920
When you sell that property, you're recapturing the depreciation.
00:25:42.640 --> 00:25:48.559
And the best way to grow wealth in real estate in the in the long term is the appreciation of the property.
00:25:48.799 --> 00:25:51.279
Now I get you're depreciating it over time.
00:25:51.599 --> 00:26:05.519
And it's the cash flow is nice, but the main people way people are growing and building wealth in real estate is owning the assets over time, letting the cash flow cover the expenses, and getting the upside of the appreciation over 10, 20 years, whatever it may be.
00:26:06.640 --> 00:26:12.480
When you're doing that personally, that depreciation number or that recapture is gonna hit you eventually.
00:26:13.839 --> 00:26:20.319
But also, I will say IRAs don't pay tax.
00:26:20.640 --> 00:26:26.640
You can take depreciation in an IRA, but there's just nowhere to put it because you don't pay tax.
00:26:27.279 --> 00:26:34.400
So it's interesting, people are like, well, I'd rather live in a world where you pay tax and you you can have there's a depreciation loss to offset it.
00:26:34.640 --> 00:26:36.400
Wouldn't you just live in a world where there's no tax?
00:26:36.960 --> 00:26:38.480
Who gives a shit about depreciation?
00:26:38.559 --> 00:26:39.119
No offense.
00:26:39.279 --> 00:26:41.680
If I'm in a place that doesn't charge me taxes.
00:26:42.480 --> 00:26:44.480
But then people are like, but I need the depreciation.
00:26:45.359 --> 00:26:46.000
For what?
00:26:46.319 --> 00:26:49.359
You don't pay taxes in the retirement account.
00:26:49.680 --> 00:26:53.599
Well, but I want the well, I better just buy it personally then, and I'll pay taxes.
00:26:55.039 --> 00:26:59.680
Now, maybe you're a real estate professional and you're taking those losses to offset other income.
00:27:00.240 --> 00:27:02.240
That's less than 5% of our clients.
00:27:02.880 --> 00:27:04.000
I get it there.
00:27:04.160 --> 00:27:16.720
But frankly, if you're a real estate professional, and we've got a lot of them that are clients that buy real estate in their IRA, they're buying their best deals in their retirement accounts, particularly their Roth accounts, because they pay zero tax on those deals.
00:27:16.960 --> 00:27:31.519
So I get that that is a thing, and we like depreciation personally, but I think the pro of I live in a world where there's no tax, so who cares about depreciation is more compelling to me.
00:27:31.920 --> 00:27:32.160
Yeah.
00:27:32.319 --> 00:27:36.000
And listen, guys, we aren't saying only buy real estate in your retirement.
00:27:36.319 --> 00:27:40.000
I tell all of my clients if you're into real estate, do both.
00:27:40.160 --> 00:27:43.279
Buy real estate within your retirement and outside.
00:27:43.599 --> 00:27:48.400
Outside, because you get the immediate cash flow, the depreciation, the tax benefits.
00:27:48.640 --> 00:27:57.920
But if you're using especially a Roth IRA, you're building a tax-free ATM because all of that rental income and appreciation goes back in totally tax-free.
00:27:58.079 --> 00:27:58.799
So do it both.
00:27:58.960 --> 00:28:01.039
We're not saying just do it with retirement.
00:28:01.200 --> 00:28:05.519
So get those outside benefits, but be building up your tax-free ATM at the same time.
00:28:05.920 --> 00:28:06.079
Yeah.
00:28:06.160 --> 00:28:06.960
And that's what I do.
00:28:07.039 --> 00:28:11.200
And frankly, that's what most of the clients at Directed IRA do that are real estate investors.
00:28:11.359 --> 00:28:16.880
They're doing real estate outside their IRA and inside their self-directed IRA or even solo 401k.
00:28:17.039 --> 00:28:22.400
And so they're using these tax-advantaged accounts, like I said, for that long-term wealth building.
00:28:22.559 --> 00:28:30.799
We're compounding and growing it over time in a world where you don't pay tax on it, particularly if you're using the Roth, which is the most popular account, by the way, at directed IRA.
00:28:31.039 --> 00:28:33.519
So, but they're also doing real estate personally.
00:28:33.680 --> 00:28:36.319
You know, like I'm might, I you know, I'm 46.
00:28:36.400 --> 00:28:40.559
Maybe I want to exit a property in five years and 10 years and take that wealth out.
00:28:40.799 --> 00:28:44.000
Um, and so it's not either, it's not either or.
00:28:44.160 --> 00:28:47.599
It's frankly for nine out of 10 clients, they're doing both, actually.
00:28:48.079 --> 00:28:49.519
My clients are investing in what they know.
00:28:49.599 --> 00:28:54.960
So if they've already been investing in real estate and they're in personal life, they're gonna come and do it inside their retirement too.
00:28:55.119 --> 00:28:55.759
Yeah.
00:28:56.720 --> 00:28:58.640
Um, yeah, it's yeah, it's interesting.
00:28:58.799 --> 00:29:12.079
I was talking to a client, real estate broker, invest in real estate personally, and she was wanting to start using her self-directed, do a self-directed IRA to uh buy her next rental property instead of buying it personally.
00:29:12.240 --> 00:29:15.359
And it's like, I have money already in a retirement account.
00:29:15.519 --> 00:29:18.799
I know nothing about the stock market or about mutual funds.
00:29:18.960 --> 00:29:20.079
I know real estate.
00:29:20.160 --> 00:29:22.400
I know how to analyze what's a good deal.
00:29:22.880 --> 00:29:26.000
Like, why would I even I don't even want to learn that other stuff?
00:29:26.160 --> 00:29:27.200
I do this every day.
00:29:27.279 --> 00:29:27.440
Right.
00:29:27.599 --> 00:29:29.680
And it's like, okay, that absolutely makes sense.
00:29:29.839 --> 00:29:30.960
You should do this.
00:29:31.599 --> 00:29:32.400
Okay, next question.
00:29:32.480 --> 00:29:35.680
Sorry, we got a little bit on the I don't know.
00:29:35.839 --> 00:29:37.279
Robert Kiyosaki's the guy.
00:29:37.359 --> 00:29:39.759
He's been he's always been like, why would you buy real estate in your IRA?
00:29:39.839 --> 00:29:40.799
You don't get depreciation.
00:29:40.960 --> 00:29:43.599
I'm like, you don't pay any tax.
00:29:43.759 --> 00:29:43.920
Right.
00:29:44.160 --> 00:29:45.359
Who cares about appreciation?
00:29:45.680 --> 00:29:45.839
Okay.
00:29:46.000 --> 00:29:54.240
John McDaniels asks, how do I use an SD IRA and IRA LLC to invest in real estate overseas in Dubai?
00:29:55.759 --> 00:29:56.400
Ashley?
00:29:56.720 --> 00:30:05.119
Yeah, and that's and that's you, so that can be tricky because LLCs, that it's not a thing in every single country.
00:30:05.359 --> 00:30:09.359
LLCs, that's a law that was created here in the United States.
00:30:09.519 --> 00:30:12.160
Not every country has LLC laws.
00:30:12.559 --> 00:30:27.119
So we can do, we can set up a maybe a Wyoming LLC to own your property in Belize, but just know that you might not have any asset protection because that's the point of the LLC is to provide your you with asset protection.
00:30:27.200 --> 00:30:37.279
So sure you have this LLC on title over there, but unless you talk to somebody local and get confirmation, we have no idea if this LLC is actually going to protect you if anything happens there.
00:30:37.359 --> 00:30:45.440
So as far as asset protection, that's something you definitely need to chat with somebody local in that foreign country to kind of see what we can do to make sure you're protected.
00:30:45.680 --> 00:30:45.920
Yeah.
00:30:46.000 --> 00:30:47.920
And we definitely have clients that do that.
00:30:48.400 --> 00:30:56.079
We're just kind of limited on how we can help you because we don't know the rules in Belize or in Dubai or all these other countries.
00:30:56.160 --> 00:30:56.480
Yeah.
00:30:56.720 --> 00:31:01.359
And and also like I don't know what's the tax ramification gonna be in Dubai.
00:31:01.440 --> 00:31:05.359
Now I know Dubai is very tax neutral, and that's the reason people go there.
00:31:05.599 --> 00:31:11.759
Um, and I'm sure we have a tax treaty in the US, but like, are is Dubai gonna care that this is an IRA making money there?
00:31:11.920 --> 00:31:13.440
Are they gonna make you pay taxes there?
00:31:13.599 --> 00:31:14.559
I I don't know.
00:31:14.720 --> 00:31:18.400
Um, and we don't know that for the hundreds of countries that are out there.
00:31:18.480 --> 00:31:20.400
So, but we still have clients that do that.
00:31:20.559 --> 00:31:32.400
So, what you would do is we would do the uh an LLC in the US, it could be Wyoming, or so I've done them, I've had a lot of clients in Florida buy stuff, you know, uh in the Caribbean or in Belize, actually.
00:31:32.480 --> 00:31:32.640
Yeah.
00:31:32.799 --> 00:31:39.119
Um and they'll do a Florida LLC that say that owns the, I think Belize has like an IBC or something, is what it's called.
00:31:39.279 --> 00:31:44.000
So it owns the Brazilian or the company in Belize.
00:31:44.240 --> 00:31:56.799
So the Florida LLC, okay, your IRA owns a Florida LLC, Florida LLC owns the IBC, it's that's the LLC corporation name naming convention in Belize, and that owns the property in Belize.
00:31:56.880 --> 00:32:00.720
So it's a it's a couple steps to get there, but it's definitely possible.
00:32:00.880 --> 00:32:05.680
And you'll want local counsel or advisors in those specific countries.
00:32:06.079 --> 00:32:07.440
We'll see it in Mexico too.
00:32:07.839 --> 00:32:16.319
We'll see clients that have we have a lot of Arizona clients that own like rental properties in Rocky Point or Cabo and places like that.
00:32:16.480 --> 00:32:29.519
And then you get into some of these trusts that they have in um Mexico where the IRA is the beneficiary and you're their authorized as manager, um, but you need a bank involved, and this is very common.
00:32:29.680 --> 00:32:34.720
So um, but you're gonna need some help from a professional down in Mexico too.
00:32:34.799 --> 00:32:35.680
We'll help you on the U.S.
00:32:35.759 --> 00:32:36.000
side.
00:32:36.559 --> 00:32:39.920
We just have zero jurisdiction outside the United States.
00:32:40.160 --> 00:32:40.400
Right.
00:32:40.559 --> 00:32:42.160
So all right.
00:32:42.240 --> 00:32:43.839
We have a question from Craig Lumen.
00:32:44.160 --> 00:32:50.079
Uh when doing real estate transactions, you often have your LLC entity pay you for your time and services.
00:32:50.400 --> 00:32:53.039
Would that be seen as a taxable distribution?
00:32:53.279 --> 00:32:58.559
What tax consequences or penalties might that be for that income event?
00:32:59.680 --> 00:33:04.640
Yeah, so it wouldn't be a taxable distribution, that would be a prohibited transaction.
00:33:04.799 --> 00:33:06.720
So yeah, even worse.
00:33:06.880 --> 00:33:07.119
Yeah.
00:33:07.279 --> 00:33:12.559
So that's black and white prohibited transaction, you cannot transact with yourself.
00:33:12.720 --> 00:33:19.200
Your IRA, your LLC cannot transact with you or any entity you own 50% or greater of.
00:33:19.359 --> 00:33:33.759
So if you were to be managing this LLC that your IRA owns that's entitled to a property and you pay yourself management fees prohibited per se, the IRS finds out, they deem it as though you no longer own that IRA.
00:33:33.920 --> 00:33:42.799
So anything that IRA owns, including that property, gets dispersed to you personally, which means if you're under 59 and a half, you're paying that 10% penalty.
00:33:42.960 --> 00:33:47.759
And depending on what type of IRA, there could be significant tax consequences.
00:33:48.400 --> 00:33:49.839
Yeah, so don't do that.
00:33:50.640 --> 00:34:00.880
So if you if you need to take money and you're 59 and a half, where you could take a non-early withdrawal penalty type distribution, you're 59 and a half.
00:34:00.960 --> 00:34:07.599
So um just send the money from the LLC back to your IRA and take a distribution from your IRA.
00:34:07.759 --> 00:34:13.760
Don't send it right from the LLC to yourself and call it like a reimbursement or a management fee or a salary or whatever.
00:34:14.000 --> 00:34:14.559
Right.
00:34:15.039 --> 00:34:15.360
All right.
00:34:15.519 --> 00:34:17.039
Jack Evans has a question.
00:34:17.280 --> 00:34:20.800
Can a rental and an IRA perform a 1031 exchange?
00:34:21.119 --> 00:34:22.000
Ooh, good question.
00:34:22.079 --> 00:34:22.719
Do you know this one?
00:34:22.800 --> 00:34:23.039
I do.
00:34:23.199 --> 00:34:23.760
I know the answer.
00:34:24.000 --> 00:34:26.239
I've never had a client try that before.
00:34:26.400 --> 00:34:30.400
I mean, I guess, but I feel it wouldn't be as beneficial, right?
00:34:30.639 --> 00:34:31.760
Yeah, because it doesn't matter.
00:34:31.840 --> 00:34:32.880
There's no tax on a game.
00:34:33.840 --> 00:34:35.519
There is one instance where it matters.
00:34:35.679 --> 00:34:35.920
Okay.
00:34:36.400 --> 00:34:50.880
So if you're familiar with UDFI and that tax, if you use debt to leverage a property, let's say you bought a$300,000 property, you put$100,000 in from your IRA, and you got a mortgage loan for the other$200,000 to buy the property, which you can do.
00:34:51.039 --> 00:34:52.639
These are called non-recourse loans.
00:34:52.800 --> 00:35:02.239
We have five or six banks on our website that lend to IRAs buying single family rentals, duplexes, commercial properties, whatever, and they'll lend on those properties.
00:35:02.480 --> 00:35:17.519
Well, when your IRA gets a loan to buy property, what the IRS does is they say that$300,000 property and that two-thirds of it was a loan that was not IRA funds, they tax two-thirds of the profits and say, well, that wasn't retirement account dollars.
00:35:17.599 --> 00:35:19.280
You don't get the non-tax on that.
00:35:19.519 --> 00:35:23.519
So that piece gets taxed under this tax called UDFI.
00:35:23.760 --> 00:35:25.280
We have some webinars and other content.
00:35:25.440 --> 00:35:27.360
There's a chapter in my book on this as well.
00:35:27.599 --> 00:35:35.039
But basically, if you sold that property, you can do a 1031 exchange to avoid the UDFI tax and roll it into next property.
00:35:35.199 --> 00:35:42.000
And I have had clients do that strategy and use a 1031 exchange to basically defer that so there would be no tax due on it.
00:35:42.079 --> 00:35:50.960
And essentially that gain is rolling into the next property into the IRA, which you can eventually you could pay off the debt and avoid having that UDFI at all.
00:35:51.280 --> 00:35:51.360
Yeah.
00:35:51.440 --> 00:35:56.079
And it's not the end of the world, the UDFI, because again, it's not tax on all of the income.
00:35:56.159 --> 00:35:57.760
It's just tax on the leverage part.
00:35:57.840 --> 00:35:58.880
So just run the numbers.
00:35:59.039 --> 00:36:01.760
If there is debt, just make sure you're calculating the UDFI.
00:36:01.920 --> 00:36:04.480
Make sure that rate of return is as big as you were hoping.
00:36:04.719 --> 00:36:05.039
Yeah.
00:36:05.360 --> 00:36:05.679
All right.
00:36:05.760 --> 00:36:09.599
Robert Duran has a two-part question, which is kind of three questions really.
00:36:09.679 --> 00:36:12.079
So if I need to repeat it, I totally can.
00:36:12.320 --> 00:36:17.920
How many properties can I flip with my SDRA LLC per year without triggering U Bit?
00:36:18.559 --> 00:36:27.360
Assuming efforts are to limit the total number of flips per year to avoid U-Bit, can I partner with another investor on a flip and call it a private loan?
00:36:27.519 --> 00:36:32.320
What distinguishes a private loan on a flip versus a partnership on a flip?
00:36:33.760 --> 00:36:42.000
Yeah, and I mean to answer the first part of it, so and there isn't kind of a black and white case law that says this.
00:36:42.159 --> 00:36:45.679
The IRS, you know, they don't like to be straight up with things.
00:36:46.000 --> 00:36:50.159
So, but we're kind of looking at what we're seeing in the rulings and the case law.
00:36:50.400 --> 00:36:59.599
And our general rule is if you're doing greater than three fix and flips new year, the IRS deems you as in the business of fix and flips.
00:36:59.679 --> 00:37:02.960
Because if you're only doing one or two, it's more passive for you.
00:37:03.039 --> 00:37:06.159
You don't necessarily have to worry about the U-Bit implication.
00:37:06.320 --> 00:37:11.679
But if you're doing greater than three, now it's really looking like you have this business, this fix and flip business.
00:37:11.840 --> 00:37:14.400
This is going to look more operational to the IRS.
00:37:14.639 --> 00:37:17.679
That's when that U-Bit's going to start coming into play.
00:37:18.079 --> 00:37:18.400
Yeah.
00:37:18.559 --> 00:37:32.480
And where this gets at, just so you know, is there's an exemption to U-Bit for capital gain income from real estate, whether it's long-term or short-term gain from selling real estate, there's an exemption for that that says that's not U-Bit.
00:37:32.639 --> 00:37:38.639
But the exemption says as long as your IRA is not doing this in the ordinary course of business.
00:37:39.039 --> 00:37:49.679
So that's where we're concerned with if every year you're flipping three, five, six properties a year in your IRA, I'm going to look at that and say, you might have U-Bit.
00:37:49.840 --> 00:37:51.920
Now, if you're like, man, I flip one or two properties a year.
00:37:52.079 --> 00:37:53.360
I'm like, I don't, oh, don't worry about it.
00:37:53.440 --> 00:37:56.480
Or maybe I flop flipped four properties this year and next year I did one.
00:37:56.559 --> 00:37:57.760
I'm like, I wouldn't worry about it.
00:37:58.159 --> 00:38:03.360
But it's like, it's the person that's doing consistently a lot of properties.
00:38:03.599 --> 00:38:12.320
Your your IRA will be looked at as being in the business of real estate and as opposed to investing in real estate and just getting capital gain and you'll you'll run into this U bit.
00:38:12.639 --> 00:38:15.280
So um so I don't know if that helps.
00:38:15.760 --> 00:38:20.000
Let me answer the second part because the second question was partnering with people.
00:38:21.119 --> 00:38:30.880
The problem with partnering with people is it's still it's still gonna come through as a is like a a short-term flip or hold, presumably.
00:38:31.039 --> 00:38:33.679
By the way, we're talking about something you hold for less than 12 months.
00:38:33.840 --> 00:38:34.079
Right.
00:38:34.320 --> 00:38:36.800
If you hold it, if you hold it over 12 months, I'm not worried about it.
00:38:36.960 --> 00:38:39.679
And maybe it was a rehab that takes a while or it's on the market for a long time.
00:38:39.760 --> 00:38:41.199
That's actually good for this analysis.
00:38:41.599 --> 00:38:46.480
Any of those ones you've got, I'm not counting those in your three deals a year that don't don't stress about.
00:38:46.800 --> 00:38:52.480
But let's say that you partnered on five deals and they're all less than a year and you got a gain on it.
00:38:52.559 --> 00:38:56.320
I'm like, ah, that's just as bad as if you just did 100% of the deal.
00:38:56.480 --> 00:38:58.480
It doesn't help you to partner on a deal.
00:38:58.719 --> 00:39:05.840
Now, if you lent on the deal and you're just the private lender just getting interest and points, that's fine.
00:39:06.000 --> 00:39:06.800
Don't worry about that.
00:39:06.880 --> 00:39:12.400
You can do a thousand loans a year on getting interest income and points, and you don't have to worry about UBIT.
00:39:12.719 --> 00:39:16.239
It's the gain and the equity stake in the property.
00:39:16.400 --> 00:39:24.239
Now I know the next question this guy's probably asking, which is in the third question, which is, well, what if it's a loan, but I get a share of the profits on the deal too?
00:39:24.480 --> 00:39:30.960
Well, that share of the profits is what's gonna lead you into are you in the business of making money on buying and selling real estate?
00:39:31.119 --> 00:39:32.960
Because you're getting a piece of the gain.
00:39:33.119 --> 00:39:38.719
And if you've got a lot of deals that way, I just worry that you're gonna run into that.
00:39:38.960 --> 00:39:40.079
Are you in the business for us?
00:39:40.239 --> 00:39:41.360
Now there's not that many cases.
00:39:41.519 --> 00:39:45.519
In fact, there's no cases on IRAs and real estate like this in U-Bit.
00:39:45.760 --> 00:39:49.760
But the U-Bit rules for IRAs are the same U-Bit rules for nonprofits.
00:39:49.920 --> 00:39:58.800
And there are cases on nonprofits buying and selling real estate, which are tax exempt as well, just like retirement accounts, but they get subjected to U-Bit in the exact same way.
00:39:58.880 --> 00:39:59.920
And there are some cases there.
00:40:00.000 --> 00:40:03.119
So that's where we're leaning on and trying to take guidance.
00:40:03.360 --> 00:40:09.599
So if you want to be safe, like I said, three deals or less a year, and you're not gonna need to stress about it.
00:40:09.679 --> 00:40:11.840
You don't even need to call your tax lawyer or your accountant.
00:40:12.000 --> 00:40:15.119
If you're doing four or five, you're kind of in a gray area.
00:40:15.280 --> 00:40:19.360
And if you've done more than five short-term deals in a year, just plan on having you fit.
00:40:19.760 --> 00:40:26.320
And it doesn't matter if you have three separate LLCs doing three flips, they're they're gonna look at the one IRA.
00:40:26.400 --> 00:40:29.920
So having multiple LLCs does doesn't prevent that.
00:40:30.320 --> 00:40:32.239
But it it is different analysis.
00:40:32.400 --> 00:40:37.920
Let's say that you and your spouse are both doing have a separate self-directed account and you're both doing flips.
00:40:38.079 --> 00:40:46.000
You could be doing three in your account a year and your spouse does three accounts or three in theirs, and that you could be doing six deals a year between the two of you.
00:40:46.159 --> 00:40:52.239
Even your traditional IRA and your Roth IRA, they're actually technically separate accounts, account types.
00:40:52.480 --> 00:41:00.079
So you could be doing three deals in your traditional, three deals in your Roth, three deals in your soul okay, and you would get you could be doing more flips.
00:41:00.159 --> 00:41:03.599
And we definitely have those clients that have got multiple accounts between them and their spouse.
00:41:03.679 --> 00:41:10.000
They got a Roth IRA, they got a soul okay, and they're just they do a lot of deals and they're running them through their retirement accounts.
00:41:10.079 --> 00:41:11.440
You will get separate treatment.
00:41:11.599 --> 00:41:14.320
You do not get separate treatment, and this is on the U-Bit.
00:41:14.800 --> 00:41:16.960
Sorry, we're going to probably go a little longer on this price.
00:41:17.599 --> 00:41:20.800
Let's say you're like, well, Matt, I did five Roth IRAs all in my name.
00:41:20.960 --> 00:41:22.079
Do I get three per deal?
00:41:22.159 --> 00:41:22.400
No.
00:41:22.559 --> 00:41:27.760
It they have to be separate account types, or you know, it's a separate person like your spouse or maybe one of your kids.
00:41:27.920 --> 00:41:28.559
Right.
00:41:29.039 --> 00:41:34.400
Okay, let's go to multi-member IRA LC, and I'll let uh Ashley set that up.
00:41:34.480 --> 00:41:38.159
Then we'll hit the crypto use and then come back for final questions.
00:41:38.400 --> 00:41:38.639
Yeah.
00:41:38.719 --> 00:41:43.119
And so what we talked about in the previous side was a single member LLC.
00:41:43.199 --> 00:41:47.039
That's one IRA account that wants to take ownership of an LLC.
00:41:47.280 --> 00:41:54.960
Now we'll be talking about multi-member IRA LLCs, an LLC that maybe has multiple IRA accounts.
00:41:55.280 --> 00:42:10.159
Because when we were talking about prohibited transactions, remember you are a disqualified party to your IRA, which means you cannot transact with your IRA or IRA LLC, which means you cannot go stay on any property that your LLC owns.
00:42:10.400 --> 00:42:15.920
So you can't transact between each other, but you can partner with your IRA.
00:42:16.159 --> 00:42:19.519
Maybe you have personal funds that you want to put into this deal.
00:42:19.679 --> 00:42:24.000
Maybe you have a really high traditional IRA, but you want to get your Roth growing too.
00:42:24.159 --> 00:42:26.880
So you want to combine these different accounts together.
00:42:27.119 --> 00:42:37.840
If you're combining multiple IRA accounts or multiple retirement accounts, or you're partnering with individuals, you will be establishing this multi-member IRA LLC.
00:42:38.079 --> 00:42:44.960
Same thing, just an LLC with multiple different members attached to it rather than just your one IRA account.
00:42:45.360 --> 00:42:50.400
Yeah, and another good use case for this is let's say there's a property you want to buy and it's 300 grand.
00:42:50.719 --> 00:42:51.920
This is a rental property, right?
00:42:52.000 --> 00:42:53.679
We're talking about investment properties, of course.
00:42:53.840 --> 00:42:59.360
And let's say you have 100 grand in your account, in your IRA account, but your spouse has 200 grand in theirs.
00:42:59.599 --> 00:43:07.280
You're like, well, I can't buy it on my own, but if we put them together, we would have 300 grand in the LLC and we could go do that deal and buy the property.
00:43:07.519 --> 00:43:14.320
Now, when you do that, we always allocate the ownership in the LLC based on the dollars invested.
00:43:14.480 --> 00:43:23.119
So that LLC would be owned one third by your IRA because it put in 100 grand, two-thirds by your spouse's IRA, because theirs put in 200K.
00:43:23.760 --> 00:43:27.599
And then that 300,000 that's in the LLC bank account would go and buy the property.
00:43:27.679 --> 00:43:29.679
Now you could both be managers of the LLC.
00:43:29.760 --> 00:43:31.679
Only one of you could be manager if you wanted.
00:43:31.840 --> 00:43:33.199
You could do it either way.
00:43:33.360 --> 00:43:40.400
Um and I and I like the multimember IRLC when we're trying to combine funds to do a specific deal.
00:43:41.119 --> 00:43:42.480
Um, because we can.
00:43:42.639 --> 00:43:47.360
You can combine multiple sources of funds, even individually, like um Ashley said.
00:43:48.000 --> 00:43:51.840
The downside, though, to the multimember IRLC, there's two downsides.
00:43:52.079 --> 00:43:55.840
Downside one is you're doing a partnership tax return for the LLC.
00:43:56.079 --> 00:43:58.800
There's no tax due on a partnership return, right?
00:43:58.880 --> 00:44:03.519
It's what's the income on The expense, and here's the K1s to the IRA, and there's typically no tax.
00:44:03.599 --> 00:44:05.840
But you do got to file the partnership return every year.
00:44:06.000 --> 00:44:07.199
So that's downside one.
00:44:07.840 --> 00:44:17.440
Downside two is once you set that initial ownership, take that example of your IRA owns a third, your spouse's owns a third.
00:44:18.159 --> 00:44:24.159
Whenever money more money is going into the LLC, it's got to go one third of from you, two-thirds from your spouse's.
00:44:24.320 --> 00:44:28.400
Whenever money's coming out of that LLC, it's going one third back to your IRA, two-thirds your spouse.
00:44:28.880 --> 00:44:32.079
So let's say you want to put 10 grand into the LLC next year.
00:44:32.159 --> 00:44:37.199
You make new contributions into each of your IRAs, and you want to put 10 grand in the LLC.
00:44:37.519 --> 00:44:42.880
Okay, well, three thousand thirty three hundred, I should say, is gonna come from your IRA.
00:44:43.280 --> 00:44:47.679
6,600 you know, the balance is the it's gonna be this one two third, two-third.
00:44:47.920 --> 00:44:50.320
6,600 will come from your spouse's IRA.
00:44:50.559 --> 00:44:55.039
So, and you can't just be like, well, well, I want to put 7,500 in and then 7,500 from my spouse's.
00:44:55.199 --> 00:44:56.320
Well, you're not 50-50.
00:44:56.400 --> 00:44:57.679
That would be 50-50.
00:44:57.840 --> 00:45:07.199
So you've so you get a little stuck there on the ownership percentages when you're trying to put more money in every year if you want to do equal amounts and you don't have exactly equal ownership.
00:45:07.360 --> 00:45:08.320
So just a little heads up.
00:45:08.639 --> 00:45:11.039
And that's when you're partnering with disqualified parties too.
00:45:11.199 --> 00:45:12.079
Kind of keep that in mind.
00:45:12.239 --> 00:45:17.519
You're locked into these percentages only if you're partnering with yourself or one of your disqualified parties.
00:45:17.679 --> 00:45:22.639
If you're partnering with one of your non-disqualified parties, you don't have to be worried about being locked into these percentages.
00:45:23.039 --> 00:45:29.440
Yeah, for example, it's just you and a friend that are invested, and you used your IRA, your friend used their IRA, or they were individual in LLC.
00:45:29.840 --> 00:45:30.719
You can do whatever you want.
00:45:30.880 --> 00:45:30.960
Yeah.
00:45:31.119 --> 00:45:32.159
You don't have to follow those rules.
00:45:32.320 --> 00:45:38.880
But if it's your IRA, your Roth IRA, your traditional IRA, your IRA, your spouse's IRA, those are disqualified.
00:45:38.960 --> 00:45:50.239
And the reason you have to put based on your ownership percentages is if you put more money in than you're supposed to, you're technically buying ownership from your spouse's IRA to your IRA.
00:45:50.320 --> 00:45:53.199
And now we're we're transacting and it's causing this.
00:45:53.360 --> 00:45:57.840
And even if you don't transfer the ownership, you've over-contributed for the value.
00:45:58.000 --> 00:46:06.000
And now there's like this self-dealing issue between you where you've put more money in, your spouse's IRA is benefiting, and it just gets into problems.
00:46:06.159 --> 00:46:08.000
So just be careful there.
00:46:08.159 --> 00:46:08.800
Yeah.
00:46:09.519 --> 00:46:17.760
Um, all right, let's talk about fees on these multimember IRLC fee versus single member LLC of what the law firm is charging, what you know, yeah.
00:46:18.320 --> 00:46:18.880
For a bargain.
00:46:19.119 --> 00:46:27.840
So for yeah, for an LLC setup, you get an hour of consultation time with an attorney, you get your articles, your EIN complete formation with the state.
00:46:28.000 --> 00:46:34.400
You get that really nice corporate book that you get to put on your shelf with your operating agreement, all of your organizational documents.
00:46:34.559 --> 00:46:38.320
For a single member, it's$11.95 plus state filing fee.
00:46:38.480 --> 00:46:41.840
For multimember,$14.95 plus state filing fee.
00:46:41.920 --> 00:46:42.000
Yeah.
00:46:43.039 --> 00:46:43.119
Yeah.
00:46:43.199 --> 00:46:44.239
And that includes everything.
00:46:44.400 --> 00:46:51.840
So um all the consultation, the opinion letter, documents, and then everything stays coordinated uh with directed IRA.
00:46:52.079 --> 00:46:53.920
Okay, let's just hit crypto.
00:46:54.000 --> 00:46:56.480
I just want to talk about this briefly for a second.
00:46:56.719 --> 00:47:00.079
Let's say that you're someone who likes investing in crypto.
00:47:00.239 --> 00:47:04.639
Maybe you do it exclusively, or you're you have the LLC structure and you want to do crypto.
00:47:04.800 --> 00:47:19.360
So, as many of you guys know, we have our crypto IRA product at directed IRA with Gemini, where you have a uh a crypto IRA with us, and that IRA owns a wallet and an exchange account with Gemini where you can buy and sell.
00:47:19.440 --> 00:47:23.519
It's not in your personal name, it's in the name of your IRA at directed, and we are all coordinated with them.
00:47:23.599 --> 00:47:26.239
And you can buy or trade 60 different cryptocurrencies.
00:47:26.320 --> 00:47:35.360
But you're on exchange with Gemini, and they have, you know, they're regulated and audited, hundreds of millions of insurance and all that, and you can go read up on how your crypto is protected at Gemini.
00:47:35.599 --> 00:47:38.400
But a lot of people are like, I don't want my crypto there, Matt.
00:47:38.639 --> 00:47:43.119
I want, I'd rather use an LLC and hold my crypto off exchange.
00:47:43.440 --> 00:47:52.159
Or I may want to, I may on-ramp with Gemini, but I might want to exchange or you exchange crypto and buy stuff not on Gemini, or maybe I want to use Kraken.
00:47:52.320 --> 00:47:54.159
We've had many clients use Kraken.
00:47:54.480 --> 00:48:09.679
Well, what you can do is this LLC structure, you use the same IRLC, but instead of buying real estate, you'll have an institutional account with Gemini, and the that'll be linked to your business checking account, and it will fund this institutional account at Gemini.
00:48:10.000 --> 00:48:12.320
And then you can buy and sell with Gemini.
00:48:12.719 --> 00:48:17.119
In this structure with an LLC, you can actually go off exchange as well.
00:48:17.360 --> 00:48:22.719
You could hold your crypto on a uh, you know, uh uh external hardware device.
00:48:22.960 --> 00:48:26.079
Um, you could go to some other exchange besides Gemini.
00:48:26.320 --> 00:48:27.840
You can basically get off exchange.
00:48:28.000 --> 00:48:30.639
When you're using our crypto IRA product, you're at Gemini.
00:48:30.800 --> 00:48:31.119
That's it.
00:48:31.199 --> 00:48:33.280
It's a lockdown, you can't move crypto off.
00:48:33.440 --> 00:48:36.639
It's it's controlled because of the regulatory requirements.
00:48:36.800 --> 00:48:39.360
When you do this LLC, you get a little more freedom.
00:48:39.519 --> 00:48:42.000
If you want to do crypto, go off exchange.
00:48:42.079 --> 00:48:45.039
You could even use, like I said, Kraken, someone we've worked with too.
00:48:45.199 --> 00:48:49.599
Um, we've just had some clients like, well, I there's a crypto I want to buy that Gemini doesn't have, but it's on Kraken.
00:48:49.760 --> 00:48:53.440
Okay, well, we can do this LLC structure and get the institutional account set up at Kraken.
00:48:53.679 --> 00:48:55.920
You want to go off exchange to store the crypto.
00:48:56.079 --> 00:49:01.519
Again, you could um use this, you have to on-ramp with Gemini, and then you basically off-ramp.
00:49:01.679 --> 00:49:03.440
So there's specific use cases.
00:49:03.599 --> 00:49:05.840
If you're not a crypto person, don't stress about this.
00:49:06.079 --> 00:49:17.599
If you I would just start here if you're trying to get a little exposure to crypto, but if you're a little more serious person and those other strategies, I'd say more advanced or protective strategies, um, this could be an option.
00:49:17.679 --> 00:49:18.880
We've definitely used it there.
00:49:19.039 --> 00:49:20.239
Anything you add for crypto, though?
00:49:20.559 --> 00:49:30.960
Yeah, I was just gonna say uh going back to the if you do set up that LLC as far as the state, again, it doesn't matter for the state, it doesn't have to be state-specific where you're living or anything like that.
00:49:31.199 --> 00:49:34.239
99% of my crypto clients do use Wyoming.
00:49:34.400 --> 00:49:42.639
That's a personal favorite of mine too, just for the privacy, because anybody can look up the Wyoming Secretary of State and it will not list who owns or manages that LLC.
00:49:42.800 --> 00:49:46.239
So we're gonna have your LLC name be something inconspicuous.
00:49:46.480 --> 00:49:49.199
It isn't gonna say Roth IRA crypto LLC.
00:49:49.280 --> 00:49:53.119
It's gonna be kept private in the name and then it's completely private with the state.
00:49:53.519 --> 00:49:56.320
Yeah, and I think it Wyoming gets oversold.
00:49:56.480 --> 00:50:01.280
I've had YouTube videos on people setting up Wyoming LLCs for the wrong reasons.
00:50:01.519 --> 00:50:10.159
But like when you have an operational business, you're gonna set that operational business up in the state where you're for you business owners, like where you're conducting business.
00:50:10.239 --> 00:50:14.079
When you're a real estate investor, we're setting up the LLC in the state where the property is located.
00:50:14.239 --> 00:50:19.760
When you have some freedom of where to set it up, we will go to Wyoming, but really for the privacy issue.
00:50:19.840 --> 00:50:19.920
Right.
00:50:20.079 --> 00:50:21.519
Because Wyoming's unique like that.
00:50:21.599 --> 00:50:27.519
And in that instance, the law firm is actually being listed as like the organizer or the person filing.
00:50:27.599 --> 00:50:28.800
So your name's not even on it.
00:50:28.880 --> 00:50:29.119
Right.
00:50:29.280 --> 00:50:30.719
Um, no one knows that it's there.
00:50:30.800 --> 00:50:36.079
And Wyoming's one of the few states where you don't have to disclose a member or a manager with the state on the filing.
00:50:36.159 --> 00:50:38.159
So um, so we've definitely found that helpful.
00:50:38.239 --> 00:50:41.840
And a lot of crypto clients, particularly in particular, value their privacy.
00:50:41.920 --> 00:50:44.960
So okay, let's take some final questions.
00:50:45.519 --> 00:50:46.880
We got five minutes for questions.
00:50:47.119 --> 00:50:47.440
All right.
00:50:47.519 --> 00:50:50.400
We we've gotten some very specific scenario-based questions.
00:50:50.559 --> 00:50:52.400
Let's get some broad-based ones here in.
00:50:52.800 --> 00:50:55.119
Um, and then we'll go back to we'll we'll end with those.
00:50:55.280 --> 00:51:01.199
So what Shrini Madala asks, what size of IRA would justify setting up an LLC?
00:51:03.199 --> 00:51:05.519
I don't think there's really a size.
00:51:05.599 --> 00:51:10.800
It's just when you have an investment that comes across your lap that you want to use retirement for.
00:51:10.960 --> 00:51:15.840
Because again, I don't want you to jump and set up these self-directed IRAs too soon.
00:51:16.079 --> 00:51:21.519
Because these custodians, they aren't going to move your money, invest your money for you unless you ask them.
00:51:21.679 --> 00:51:27.440
So I don't want you to just park your money at a custodian, rack up their fees before you know what you want to do with it.
00:51:27.599 --> 00:51:40.079
It's not really an amount, but it's just once you come across a deal that you want to use retirement for, that's when you make the move over to a custodian who allows that self-directed IRA, and then you can take control of your retirement from there.
00:51:40.320 --> 00:51:40.559
Yeah.
00:51:40.639 --> 00:51:43.440
And I think for the LLC, it just depends on the deal.
00:51:43.519 --> 00:51:45.599
Like, let's say you let's look at that crypto use case.
00:51:45.840 --> 00:51:55.119
Like, well, I want to do 10K of crypto off exchange, or I want to use someone besides Gemini, and I'll do the institutional account with let's say Kraken or something.
00:51:55.280 --> 00:51:57.360
Um, cool, that that can work.
00:51:57.519 --> 00:52:05.519
Like, let's go to that structure and your deal you want to try to do is 10 grand, or maybe you're gonna wholesale a property or something, and and it's a low dollar amount.
00:52:06.239 --> 00:52:12.719
For me, I didn't do mine until I had the 85 grand, you know, to put in, which I started at zero, like everyone.
00:52:12.800 --> 00:52:15.519
I was just contributing, trying to get enough money to do a deal.
00:52:15.840 --> 00:52:19.679
So um, it just depends on on your situation and the deal.
00:52:20.000 --> 00:52:28.639
I will say you kind of have to, like Ashley said, is like, you know, don't get the account set up until you have something you want to do, but you also got to get ready.
00:52:28.880 --> 00:52:38.320
So another way to look at it, we've had a lot of clients do this, and I I prefer this approach too, is let's say you're like, well, Matt, I want to do a real estate deal, but I don't know what deal it is.
00:52:38.400 --> 00:52:40.079
I don't even know what state the property's in.
00:52:40.159 --> 00:52:46.960
But I'm shopping, I'm being active, I'm looking at different deals, I'm interested in San Antonio and Kansas City, but I don't know which state I'm gonna go in.
00:52:47.039 --> 00:52:49.440
I'm kind of I made offers or I'm looking at stuff.
00:52:49.679 --> 00:52:52.559
Is well, let's get the IRA going.
00:52:52.960 --> 00:53:03.679
Let's get at least 500 bucks, 5,000, 10,000, enough to at least get an earnest money deposit going on a deal so that you can start moving quickly once you find the deal.
00:53:03.840 --> 00:53:07.599
The best deals that you find are deals you kind of got to get moving on quickly.
00:53:08.400 --> 00:53:13.119
So um now, if you already found that deal, then just move the whole account over here or the amount you need for that deal.
00:53:13.199 --> 00:53:17.199
But if you're still in like shop and wait and see mode, let's get the account going.
00:53:17.440 --> 00:53:22.639
I would probably say get five grand over here because it's enough to do earnest money if you're doing a real estate deal.
00:53:22.800 --> 00:53:24.320
Um, but you can leave the rest.
00:53:24.400 --> 00:53:34.000
Maybe you've got 400,000 you're planning to do in the real estate deal or 200, whatever it is, leave the other 195 over there at Fidelity and you can move the 5K.
00:53:34.239 --> 00:53:39.920
The other thing, you can actually buy mutual funds, index funds at directed too while you're in your account.
00:53:40.159 --> 00:53:54.400
So um, if you know again you're gonna do a self-directed deal and you need to be ready for it, um, you can just move that amount of money over here and invest in an index fund or a mutual fund or even an individual stock while you're waiting to find that deal, and then you can sell it.
00:53:54.559 --> 00:53:59.280
So, but be a little proactive on the dollar amount and the deal.
00:53:59.519 --> 00:54:02.960
Um, and you want because you want your money working for you best you can.
00:54:03.039 --> 00:54:08.639
Now you're gonna be in cash for a certain period of time until that deal closes because you need to get ready.
00:54:08.800 --> 00:54:12.639
Um and who knows, maybe the market goes down between this or it goes up.
00:54:12.800 --> 00:54:14.079
Yeah, it's always tough.
00:54:14.159 --> 00:54:18.480
But all right, we have a question on anonymity and privacy.
00:54:18.719 --> 00:54:22.719
What is the downside of this LLC being in your name versus anonymous?
00:54:22.960 --> 00:54:27.119
Should I try not to name my self-directed IRA LLC with my name?
00:54:27.440 --> 00:54:39.599
Yeah, and it's just a good idea because remember, kind of treat this IRA, this LLC as this separate thing that you can't transact and and really interact with other than being a manager of the LLC.
00:54:39.760 --> 00:54:44.400
So yeah, I want the name of your LLC, I want it to be private and conspicuous.
00:54:44.559 --> 00:54:46.159
Again, I don't want to see crypto in it.
00:54:46.239 --> 00:54:47.760
That makes banks funny sometimes.
00:54:47.840 --> 00:54:51.440
I don't want it to see Roth or say Roth IRA LLC.
00:54:51.599 --> 00:54:55.119
We don't want people to know that you're using retirement money for these deals.
00:54:55.199 --> 00:54:56.639
So yeah, just good rule of thumb.
00:54:56.800 --> 00:54:58.000
Always keep things private.
00:54:58.079 --> 00:55:00.000
Don't have your first and last name in there.
00:55:00.320 --> 00:55:02.400
Nothing that can really tie things to you.
00:55:02.719 --> 00:55:07.039
Yeah, that's why I like, you know, I was giving the your favorite music album name.
00:55:07.119 --> 00:55:07.199
Yeah.
00:55:07.360 --> 00:55:09.280
Maybe it's Octum Baby LLC.
00:55:09.760 --> 00:55:10.559
You know, I don't know.
00:55:10.639 --> 00:55:12.320
You know, maybe it's that's just a cool name.
00:55:12.639 --> 00:55:13.840
Any U2 fans out there, yeah.
00:55:14.000 --> 00:55:15.440
Yeah, that's for you, YouTube fans.
00:55:15.599 --> 00:55:16.960
Do you know Octum Baby?
00:55:17.199 --> 00:55:18.079
Um, I know U2.
00:55:18.480 --> 00:55:18.639
Okay.
00:55:18.800 --> 00:55:18.880
Yeah.
00:55:19.119 --> 00:55:20.159
Oh, that's an album from YouTube.
00:55:20.559 --> 00:55:20.960
Oh, okay.
00:55:21.039 --> 00:55:21.119
Okay.
00:55:21.599 --> 00:55:21.760
Okay.
00:55:21.920 --> 00:55:22.079
All right.
00:55:22.320 --> 00:55:23.760
It had Zuropa on it.
00:55:23.840 --> 00:55:24.000
Yeah.
00:55:24.400 --> 00:55:24.960
Lemon.
00:55:25.119 --> 00:55:25.199
Okay.
00:55:25.519 --> 00:55:27.280
It's a forgotten, it's a forgotten album.
00:55:27.440 --> 00:55:27.679
Yeah.
00:55:27.920 --> 00:55:30.079
Maybe you're more familiar with Joshua Tree, maybe?
00:55:30.400 --> 00:55:31.199
Yes, I do know that one.
00:55:31.440 --> 00:55:31.920
You know that one?
00:55:32.079 --> 00:55:32.159
Okay.
00:55:32.480 --> 00:55:32.719
Okay.
00:55:32.880 --> 00:55:33.360
All right.
00:55:33.760 --> 00:55:37.920
Um, anyways, I I gotta think of my next LLC name.
00:55:38.000 --> 00:55:39.119
I need that new one, actually.
00:55:39.280 --> 00:55:40.480
I've done boring ones.
00:55:40.639 --> 00:55:42.480
I've done, I've kind of got off my band names.
00:55:42.800 --> 00:55:43.280
Footloose.
00:55:43.599 --> 00:55:44.239
Footloose?
00:55:44.400 --> 00:55:47.360
You know, Angel, he turns out Angel's a Footloose fan.
00:55:47.440 --> 00:55:47.840
I didn't know that.
00:55:50.000 --> 00:55:50.480
It's hot.
00:55:50.719 --> 00:55:52.719
Yeah, it's it's uh it's a good listen.
00:55:52.800 --> 00:55:52.960
Yeah.
00:55:53.280 --> 00:55:56.320
I have a pet tortoise, so I have a tortoise capital LLC.
00:55:57.280 --> 00:55:57.760
That makes sense.
00:55:58.079 --> 00:55:58.239
Okay.
00:55:58.320 --> 00:55:59.519
What's the tortoise's name again?
00:55:59.599 --> 00:56:00.239
Uh tortilla.
00:56:00.480 --> 00:56:00.880
Torilla.
00:56:02.719 --> 00:56:03.920
Wasn't this Kevin's tortoise?
00:56:04.320 --> 00:56:05.280
Yeah, he's donated.
00:56:05.519 --> 00:56:06.000
Yep, yep.
00:56:06.079 --> 00:56:06.639
I adopted him.
00:56:07.119 --> 00:56:07.599
Such a good home.
00:56:07.679 --> 00:56:07.760
Yep.
00:56:09.599 --> 00:56:10.000
All right.
00:56:10.159 --> 00:56:13.039
Uh okay, what maybe one final question?
00:56:13.679 --> 00:56:14.000
Okay.
00:56:14.559 --> 00:56:15.199
Are we good?
00:56:15.760 --> 00:56:18.079
If you're good in Michelle's answer to them, I want to wrap it up.
00:56:18.400 --> 00:56:21.039
Uh no, let's get one more in.
00:56:21.119 --> 00:56:21.840
Let's get one more in.
00:56:22.000 --> 00:56:22.159
Okay.
00:56:22.239 --> 00:56:22.960
I shouldn't have gone there.
00:56:23.199 --> 00:56:23.519
Yeah.
00:56:23.760 --> 00:56:24.639
I threw it, you know.
00:56:25.119 --> 00:56:26.480
We'll do an we'll do an easy one.
00:56:26.559 --> 00:56:27.760
How about we'll do this one?
00:56:27.840 --> 00:56:29.280
Because I think we know the answer to this one.
00:56:29.440 --> 00:56:29.599
Okay.
00:56:29.760 --> 00:56:30.480
From Ken.
00:56:30.719 --> 00:56:35.760
Can you buy a property from a friend for pennies on the dollar through an IRA L L C?
00:56:36.880 --> 00:56:45.519
So your friend, not a disqualified party, so not prohibited per se, but could be considered self-dealing.
00:56:45.760 --> 00:56:51.440
So there are these other transactions that can come into play that maybe aren't prohibited per se.
00:56:51.599 --> 00:57:07.280
But if the IRS snoops around and they're looking at all the facts and circumstances and they think maybe you're benefiting from your IRA in some way, your IRA's benefiting from you in some way, or even somebody who isn't disqualified to you, they're benefiting because of what you're doing.
00:57:07.440 --> 00:57:12.320
That can be raised to a self-dealing, which can be escalated to a prohibited transaction.
00:57:12.480 --> 00:57:21.280
So when you're transacting with your IRA, and even if it's with non-disqualified parties, those transactions always have to be arm's length transactions.
00:57:22.639 --> 00:57:23.599
Yeah, well said.
00:57:23.760 --> 00:57:28.079
And I think like the question would be would that friend sell that property to me?
00:57:29.280 --> 00:57:32.880
And if the answer is no, then I'm like, then why are they selling it to you?
00:57:33.599 --> 00:57:39.360
Because if there's some like, well, I'm gonna kick them back money somehow, that's where we start becoming that's gonna be a problem.
00:57:39.599 --> 00:57:39.760
Right.
00:57:40.079 --> 00:57:40.320
Right.
00:57:40.559 --> 00:57:41.440
That don't do that.
00:57:41.599 --> 00:57:41.920
Yeah.
00:57:42.159 --> 00:57:42.639
All right.
00:57:42.800 --> 00:57:44.719
Uh let's get to the slide here.
00:57:44.800 --> 00:57:46.159
We do have a promo right now.
00:57:46.239 --> 00:57:54.719
For any of you that have don't have a self-directed IRA directory or need to open another one, you want to get going on an IRLC, you can save 200 bucks, use summer 200.
00:57:54.880 --> 00:57:56.079
It's the promo code.
00:57:56.239 --> 00:57:58.559
Um, it'll save on opening a new account right now.
00:57:58.639 --> 00:58:02.159
And Ashley's contact has been shared in the chat.
00:58:02.400 --> 00:58:06.880
Um, so let's just say it here now, just in case anybody's watching the replay.
00:58:06.960 --> 00:58:08.239
I don't know if the chat goes on the replay.
00:58:08.320 --> 00:58:09.280
Does the chat show up on the replay?
00:58:09.760 --> 00:58:09.920
Okay.
00:58:10.079 --> 00:58:11.760
How do they get a hold of you, Ashley?
00:58:12.000 --> 00:58:14.639
Maybe drop your email if they want to work specifically with you.
00:58:14.800 --> 00:58:17.119
Of course, people can go to kkoslawyers.com.
00:58:17.280 --> 00:58:21.360
You can learn more about the law firm and the services there, and you can schedule a call with one of the attorneys.
00:58:21.440 --> 00:58:22.159
But what's your specific call?
00:58:22.480 --> 00:58:23.920
Yeah, feel free, shoot me an email.
00:58:24.000 --> 00:58:26.239
I'm super responsive and I'll get you taken care of.
00:58:26.400 --> 00:58:35.199
But my email is my name Ashley A S H L E Y dot B-U-R-R at KKOSlawyers.com.
00:58:35.599 --> 00:58:37.840
And I've already asked, she is not related to Aaron Burr.
00:58:38.000 --> 00:58:38.239
I am not.
00:58:40.480 --> 00:58:41.360
Even though you're from New York.
00:58:41.440 --> 00:58:41.760
Yeah.
00:58:42.159 --> 00:58:42.719
Maybe you are.
00:58:42.880 --> 00:58:44.079
Have you done your family history?
00:58:44.400 --> 00:58:44.639
I haven't.
00:58:44.719 --> 00:58:48.960
I haven't done a genealogy, but I must admit, in that situation, I am team Hamilton.
00:58:49.039 --> 00:58:52.559
So it's true, Aaron Burr was the bad guy.
00:58:52.719 --> 00:58:55.519
Yeah, so sorry, Aaron, if you're listening, but yeah, sorry.
00:58:55.840 --> 00:58:56.000
Yeah.
00:58:56.159 --> 00:58:56.719
But it'd be cool.
00:58:57.199 --> 00:58:57.599
It would be cool.
00:58:57.679 --> 00:58:58.079
It would be cool.
00:58:58.239 --> 00:58:58.400
All right.
00:58:58.480 --> 00:59:00.400
Now you won't forget her name, Ashley.burr.
00:59:00.719 --> 00:59:01.840
A.burr.
00:59:02.079 --> 00:59:02.639
Yes.
00:59:03.280 --> 00:59:04.559
Isn't that in Hamilton?
00:59:04.880 --> 00:59:05.199
Uh-huh.
00:59:05.280 --> 00:59:05.920
That's what I'm saying.
00:59:06.079 --> 00:59:06.159
Wow.
00:59:06.639 --> 00:59:06.880
I know.
00:59:07.360 --> 00:59:07.519
Okay.
00:59:08.079 --> 00:59:09.599
That we should change your email address.
00:59:09.920 --> 00:59:10.960
We can, we can.
00:59:11.760 --> 00:59:12.159
All right.
00:59:12.320 --> 00:59:14.400
Um, well, thanks everybody for tuning in.
00:59:14.480 --> 00:59:18.159
Make sure you get over to directedira.com slash webinar where you can watch the replay.
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We will remind you when the replay is up and available.
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The slide deck will be there as well.
00:59:22.239 --> 00:59:25.920
Thank you for any of you who are customers of directed IRA and of KKS Lawyers.
00:59:26.000 --> 00:59:27.519
If you're both, we appreciate your business.
00:59:27.599 --> 00:59:29.360
And hopefully, this is educational today.
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We'll see you next time.
00:59:30.639 --> 00:59:31.440
Thank you.