CVD question

Submitted by Denny Stripling on Mon, 2020-12-07 20:33

Hi,
Here’s my situation.
I have a land lot that’s owned in a self-directed IRA. I would estimate that it’s worth 120k. I’d like to get it out of the IRA and in to my name.
I’m hoping to use the 100k CVD vessel to move the property out and under my name.
How do I do this?

My guess/assumption is that I would
1) need to get it appraised, assuming it would come in around 120k
2) work with the ira company to transfer the title to my name
3) take the equivalent of a 120k distribution (how does this work?)
4) pay 10% penalty on the 20k overage
5) spread the 120k tax burden out over 3 years

What am I missing? And is there a better option to achieve my goal?
Thank you!



Submitted by Alan - IRA critic on Mon, 2020-12-07 22:14

  • The SD IRA custodian should have already required an appraisal if they had doubts about the value because they have to report the year end value on Form 5498 to you and the IRS.  So unless you have an objection to their valuation, you could just request that the entire parcel be distributed out of the IRA. The custodian should know what paperwork is required. If 120k is the custodian’s determined value, they would issue a 1099R for 120k. As you suspected, you could only treat 100k of the distribution as a CRD on Form 8915 E and could pay the taxes over 3 years. Penalty is waived. The other 20k would have to reported separately, and you would have to report that 20k of income this year (last date for CRD is 12/30/2020) and you would owe the 10% penalty on the 20k. In other words, taxable income for 2020 would be 53,333 with 33,333 in 2021 and 2022.
  • If custodian requires an appraisal, it will be a real time crunch to get this all done by the 30th.
  • Of course, you would have to specifically qualify for a CRD in order to do this.

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