I know there are different ways to leverage an IRA within an LLC, for instance with a non-recourse loan. I also know that certain transactions are prohibited between the IRA LLC and the IRA owner.

What I want to know is whether both the owner and the IRA can together form and capitalize the LLC — [b]AFTER WHICH[/b] the IRA owner becomes a disqualified person. But until the LLC is formed, is the owner disqualified from contributing to the LLC capital? In other words, with what I have in mind there would be no transaction BETWEEN the IRA LLC and IRA owner, but both would simultaneously form and capitalize the LLC. (Along the lines of the reasoning in [i]Swanson v. Commissioner[/i], 1996).

In this case (if it’s doable), the LLC assets would be 70% or 75% owned by the IRA, and 25% to 30% owned by the IRA owner.

I imagine that this would trigger UBIT on 25% to 30% of the revenue from the LLC’s investment (rental property).

It’s a separate question whether this way of doing things is more advantageous than UBIT on a non-recourse loan, whose LTV ratio is reduced gradually as the loan is paid off, thereby reducing the tax liability on that portion of the co-investment. But it may be simpler to just capitalize the IRA together at the outset. I’m looking at all options.

I’d appreciate an opinion.