IRS Private Letter Rulings Concerning IRAs

An IRS private letter rulings (PLRs) is a statement by the IRS given to a taxpayer who submitted a request to the IRS for it’s position with respect to one or more federal tax issues set forth in the PLR.  The PLR process is a way for a taxpayer to determine in advance of taking action if the proposed action will cause a problem with the IRS.  PLRs annot be relied on by any person except the person who applied for and obtained the PLR.  Although PLRs do not have any precedential value, they are instructive because they do indicate IRS thinking with respect to the issues addressed in the PLR.

Note: As we discuss IRS Private Letter Rulings we are not giving any tax or legal advice. 

IRS Private Letter Rulings have little precedential value. The statements made by the IRS in Private Letter Rulings can be relied on only by the taxpayer(s) who requested the Private Letter Ruling.  The IRS Private Letter Rulings listed below are for informational purposes and to inform you as to positions and statements made by the IRS with respect to IRA investments and transactions.

IRS Private Letter […]

IRS Private Letter Rulings Concerning IRAs2018-05-13T13:58:54-07:00

Department of Labor Advisory Opinion 2006-09A

[RK Summary:  The Department of Labor ruled that an IRA owner could not cause the IRA to invest in promissory notes issued by an entity that was controlled by the IRA owner’s son in law because it would be a prohibited transaction under Internal Revenue Code Section 4975.]

The text of  Department of Labor Advisory Opinion 2006-09A is below.

December 19, 2006
Edward A. Appelt
24 Winslow Drive
Pittsburg, PA 15229

Department of Labor Advisory Opinion 2006-09A
IRC Section 4975 (c)(1)(A) & (B)

Dear Mr. Appelt:

This is in response to your request for an advisory opinion under section 4975 of the Internal Revenue Code (Code). Specifically, you ask whether allowing the owner of an individual retirement account (IRA) to direct the IRA to invest in notes being offered by a corporation, in which a relative of the IRA owner is the majority owner and stockholder, would give rise to a prohibited transaction under Code section 4975.(1)

You represent that as the owner of an IRA for which you have retained investment discretion, you would like to direct the investment of these IRA funds into notes (Notes) that are […]

Department of Labor Advisory Opinion 2006-09A2019-03-17T14:14:14-07:00

Department of Labor Advisory Opinion 2006-01A

RK Summary:  The Department of Labor ruled that an IRA owner could not cause the IRA to invest in a new limited liability company that would purchase real estate and lease it to an entity 68%  of which is owned by the IRA owner because it would be a prohibited transaction under Internal Revenue Code Section 4975.  The opinion contains a statement that IRA owners should always keep in mind before an IRA LLC makes an investment”  “the Department considers “a fiduciary who makes or retains an investment in a corporation or partnership for the purpose of avoiding the application of the fiduciary responsibility provisions of the Act to be in contravention of the provisions of section 404(a) of the Act.”

The text of Department of Labor Advisory Opinion 2006-01A is below.

January 6, 2006
Debra C. Buchanan, Esq.
Guidant Legal Group, PLLC
225 Commerce Street, Suite 450
Tacoma, WA 98402

Department of Labor Advisory Opinion 2006-01A
ERISA Sec. 29 CFR 2509.75-2

Dear Ms. Buchanan,

This is in response to your request for an advisory opinion as to whether the following proposed transaction would be prohibited under section 4975 of […]

Department of Labor Advisory Opinion 2006-01A2019-03-17T14:14:14-07:00

Department of Labor Advisory Opinion 2000-10A

[RK Summary:  The Department of Labor ruled that a prohibited transaction would not occur under Internal Revenue Code Section 4975(c)(1)(A) if an IRA owner caused the IRA to purchase a 39.38%  of limited partnership interests in a limited partnership in which the IRA owner was the sole general partner with a 6.52% interest and in which the IRA owner owned 12.11% through his investment in another entity despite members of his family also owning limited partnership interests in the same limited partnership.”  Note:  The IRA owner was Leonard B. Adler and he had money in the Fetner Family Partnership that invested money with the now infamous Bernard Madoff.]

The text of Department of Labor Advisory Opinion 2000-10A is below.

July 27, 2000

Hugh Janow
Janow & Meyer, LLC
One Blue Hill Plaza
P.O. Box 1606 Suite 1006
Pearl River, N.Y. 10965-8606

Department of Labor Advisory Opinion2000 – 10A
ERISA Section 4975(c)(1)(A)

Dear Mr. Janow:

This is in response to your request for an advisory opinion under section 4975 of the Internal Revenue Code (Code). Specifically, you ask whether allowing the owner of an IRA to direct the IRA to […]

Department of Labor Advisory Opinion 2000-10A2019-03-17T14:14:13-07:00

Department of Labor Advisory Opinion 1993-33A

[RK Summary:  The Department of Labor ruled that an IRA owner could not cause the IRA to purchase land at fair market value from a tax-exempt entity of which the IRA owner’s daughter and son-in-law were the officers and directors and then lease the land back to the entity at fair-market rent or below market rent, depending on the entity’s ability to pay because it would be a prohibited transaction with a disqualified person under Internal Revenue Code Section 4975.]

December 16, 1993

Mr. Roberto Faith
1101 S.W. 102 Court
Miami, Florida 33174

Department of Labor Advisory Opinion 2006-09A
IRC Section 4975 (c)(1)

Dear Mr. Faith:

Your letter to the Internal Revenue Service (the Service) has been forwarded to this Office for our consideration and response with respect to the first of the two rulings you requested. You request guidance concerning the application of the prohibited transaction provisions of the Internal Revenue Code (the Code) to a proposed purchase and lease-back of a tax-exempt school’s land and building by a self-directed Individual Retirement Account (the IRA). Specifically, you ask whether the purchase and lease-back of the school would result in a prohibited transaction under section 4975 of the […]

Department of Labor Advisory Opinion 1993-33A2019-03-17T14:14:13-07:00
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