IRA owned LLC

Forum|Forum|6 years ago
March 11, 2020
4 replies
46 views

I have an LLC in Washington state that is wholly owned by my traditional IRA (single member LLC). The LLC earned interest income from an investment in 2019 and my LLC received a 1099-INT for that income, that was also sent to the IRS. Do I need to enter anything on my personal tax return? Do I need to file a separate return for the LLC?

Thanks

MinhT1

Level 15

No, you do not report the earnings of the LLC owned by your IRA on your personal tax return.

If your IRA owns an LLC 100%, then it is disregarded for tax purposes (single-member LLC) and the LLC does not need to file a tax return to the IRS. If your IRA incurs Unrelated Business Income Tax (UBIT), then it is required to file a tax return. The IRA files a tax return and any taxes due are paid from the IRA

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RT9Author

Level 2

Thanks @MinhT1 . If my IRA/LLC does have UBIT in the future who physically creates the tax return? Is that something I do and submit it to the IRS or do I have to send it to my IRA custodian for submission?

Anonymous

just want to alert you to some things about a single member LLC within an IRA. UBIT is one

Serving as the Manager of the IRA/LLC allows you to enter into contracts on behalf of the IRA/LLC and to sign checks on behalf of the IRA/LLC. There are restrictions on the amount of work you may do (for example, if the IRA/LLC owned a property you may not work on the property) but you may oversee the administrative matters like the signing of contracts and checks. The prohibited transaction rules still apply to IRA/LLC’s in the same way they apply to self-directed IRA's so you still must pay careful attention to these rules and if you have not as yet. you need to consult with professionals who are competent in the laws that apply to retirement plans

there can be serious consequences if you engage in prohibited transactions and the iRS catches it.

RT9Author

Level 2

Thanks @12309 . I usually run potential investments past my IRA custodian to make sure I'm in compliance with IRA rules. I appreciate the additional info