Posted by John Merchant on August 18, 2006 at 11:07:47:
Paul,
Since I’m not a big believer in the multi-entity approach (as I think it’s all too often, over-kill and unnecessary) I think I’m not the best one to advise you on your question.
Throwing this open to “the group” who’d step up and advise Paul on this one?
Limited Partnership and money partners - Posted by Eric (MI)
Posted by Eric (MI) on June 19, 2006 at 01:04:22:
I have a couple of money partners that have their money in a self directed IRA. Is it possible to have the money partners purchase shares in a Limited Partnership or LLC to use for the purhase and rehab of a fixer? How would one go about it?
The reason I am asking about doing it this way is that they want to limit their exposure and I don’t know how else to go about mixing money from seperate IRA accounts.
Re: Limited Partnership and money partners - Posted by Bob Smith
Posted by Bob Smith on June 23, 2006 at 15:20:57:
Bear in mind that an IRA that is a member of a partnership that does fixers will be subject to unrelated business income tax, at trust tax rates.
Re: Limited Partnership and money partners - Posted by John Merchant
Posted by John Merchant on June 19, 2006 at 15:15:34:
I’d be happy to walk you through how I form and use LLCs frequently to invest SDIRA money together with other funds from SDIRA owner et al.
If you’d call me at (253) 228-2277 I’d show you what & how I do it.
LLP vs. LLC - Posted by John Merchant
Posted by John Merchant on June 19, 2006 at 15:05:34:
First, an investment by a SDIRA is itself a liability limit tool, because the SDIRA owner cannot be sued for anything more than the balance of his SDIRA.
I’d suggest you talk to your lawyer about his fees in drafting a plain LLC, which many of use when mixing IRA money from one investor with UN-qualified funds from one or more other investors (may include SDIRA owner himself in same IRA…according to US Tax Court decision)and cost and ramifications of LLP, in which the manager alone is liable but LPs are not.
On my LLCs, I incorporate those myself with very low cost. In most states very simple LLC formation cost and very simple form to complete and file.
UBIT like monster in the dark - Posted by John
Posted by John on June 25, 2006 at 12:11:00:
I’ve seen many SDIRA owners cowed by spectre of big, ugly monster UBIT lurking in the dark, but when the light was turned on, it suddenly looked small and beatable.
With a little careful calculation of the resulting income taxes you’d probabbly learn it’s still a better move than not using SDIRA money.
If you’re no accountant, have your accountant calculate this for you and you’ll see what I mean.
Re: LLP vs. LLC - Posted by Paul Tovbin
Posted by Paul Tovbin on August 18, 2006 at 24:50:21:
John,
May I ask you this: I bought an income property in NY state in myself and my wife’s names. I have already set up an LLC in a different state. I plan to set up a land trust using the forms in Mr. Bronchick’s book with LCC being the beneficiary.
How would I organize the process of property mgmt sending the rental checks. Made to whom? To the LLC -then it’s not anonymoous anymore? To the trustee, since her/his name will be in the title history anyway once I quit claim the property into the land trust?
Thank you,
Re: UBIT like monster in the dark - Posted by Bob Smith
Posted by Bob Smith on June 25, 2006 at 14:13:36:
Depending on how profit is allocated, I would think a C corporation better oftentimes in this situation, since paying UBIT maxes out your marginal tax rate at only $10,500 in income. The C corp gets that nice $50k/15% bracket, and doesn’t hit that nasty 39% bracket until $100k in net income. Yes, you’re right that if the return is high enough, you might as well pay the tax.