TAX COURT CASE ON MINGLING IRA ASSETS
March 18, 2022 - Douglas Myser
Tax court case on mingling IRA assets. The Tax Court found for the IRS that Donna McNulty had physical possession of gold coins, that were purchased by her IRA, which caused tax taxable distribution from the IRA. In 2015, McNulty purchased IRA services through the website of Check Book IRA by which she established a self-directed IRA that was the sole member of Green Hill Holdings LLC. Check Book advertised on its website that such an LLC could invest in American Gold Eagle Coins that the IRA's owner could then hold at his or her's home without tax consequences or penalties so long as the coins were titled to the LLC. Tax court case on comingling IRA assets.
McNulty named Kingdom Trust Co., an independent qualified custodian, as the IRA's custodian, Green Hill's articles of incorporation named McNulty and her husband as its managers and their personal residence as its principal place of business. The couple also both had signatory authority over Green Hill's bank account. McNulty authorized direct transfers to her IRA of $378,487 from an individual retirement annuity in 2015 and of $48,375 from a Sec. 401(k) plan in 2016 and directed Kingdom Trust to use those funds to purchase membership interests in Green Hill. She then had Green Hill use most of the funds to purchase American Eagle coins form an authorized dealer. The coins invoices listed Green Hill as the purchaser, but he shipping labels identified McNulty and or IRA as the recipient. The coins were shipped to McNulty's home, where she stored them in a safe along with coins purchased by her husband's self directed IRA and coins she and her husband purchased directly.
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