Prohibited transaction or is this kosher?
Client A owns V, a C Corporation. Client K, A’s uncle, wants to invest in V as follows (to circumvent issues about trusts being accredited investor). K’s IRA will make an investment in V. Immediately after this investment, two (irrevocable) trusts that were created for the benefit of K’s two children will purchase 2/3 of the investment K made in his IRA. K was the grantor of these two trusts. K’s ex-wife and brother are the trustees of the two trusts. This smells bad, but is it so bad that it is prohibited?
Thoughts?
Permalink Submitted by Alan - IRA critic on Sat, 2023-04-29 22:58
Does K hold the investment in V with a self directed IRA custodian, and if so has K run this past this custodian , particularly the purchase mechanics by the trust? SD IRA custodians have more hands on experience with prohibited transactions than anyone here.
Permalink Submitted by Thomas MacAdam on Mon, 2023-05-01 17:45
Thank you I will have him reach out to the Custodian.