Purchase commercial property using profit sharing
I have a client an MD (50), who wishes to use his Profit Sharing plan as a down payment for a new office. He will secure a mortgage for the balance. He will be leasing the majority portion to a Hospital Group, and his PC will rent the balance. Can this be done without triggering the 10% penalty and an ordinary income tax? If so can we come to you to help structure?
Permalink Submitted by Bruce Steiner on Fri, 2010-08-06 20:48
From the facts presented, it sounds like it would be a prohibited transaction under Section 4975. If so, the penalty is an excise tax rather than an income tax.
Depending on the facts, it may be possible to get a prohibited transaction exemption from the Labor Department, which would permit the plan to do this without penalty.
Yes.