Accounting and Self-Directed IRA LLC

Posted by Beta-B4- on September 26, 2009, 12:29 pm

Please log in for more thread options

Does anyone here have a Self-Directed IRA LLC (a.k.a. "checkbook IRA") set
up that they use for some of their investments -- including buying real
estate?

I have one. This Self-Directed IRA LLC (SDIRA-LLC) is a single member LLC
in which 100% of the shares of the LLC are owned by my self-directed IRA
that I set up earlier at Sunwest Trust. Those LLC shares are assets of my
IRA, not my assets. I am located in New Jersey, and the SDIRA-LLC is set up
in New Jersey.

I have a specific question about how the SDIRA-LLC is handled in terms of
reporting and filing tax returns. Here's how I "think" it may work, but I
don't know for sure:

Since all of the shares of the SDIRA-LLC are owned by and held in my IRA
(and not owned by or held by me), I am thinking that any profit or loss on
the SDIRA-LLC does not get reported on my tax returns. In fact, I think
that nothing about the SDIRA-LLC would appear on my tax returns. Instead,
the SDIRA-LLC needs to have its own separate bookkeeping and accounting
done, and the end-of-year asset value (and maybe profit and loss) get
provided to the IRA custodian (Sunwest Trust).

Is this correct?

Obviously, I need to arrange for an accountant to help me with all of this
self-directed IRA and SDIRA-LLC stuff as well as all of my tax, accounting,
and QuickBooks setup needs. I am in the process of doing that right now.
But, in the meantime, if anyone knows and can provide the answer to the
above question about how SDIRA-LLC's are reported for tax purposes, I would
appreciate it.

Thanks.