Recent Tax Court Case Exposes Risks of Indirect Prohibited Transactions by IRAs | White & Case LLP International Law Firm, Global Law Practice
Recent Tax Court Case Exposes Risks of Indirect Prohibited Transactions by IRAs

Recent Tax Court Case Exposes Risks of Indirect Prohibited Transactions by IRAs

Tax-qualified pension, savings and retirement plans and individual retirement accounts ("IRAs") are subject to complex prohibited transaction rules under § 4975 of the Internal Revenue Code of 1986, as amended (the "Code" (section references in this article are to the Code, unless indicated otherwise)). A recent United States Tax Court case, Peek v. Comm'r, 140 T.C. No. 12 (May 9, 2013), illustrates the complexity and breadth of these prohibited transaction rules and the draconian consequences visited upon an IRA that violates these rules. In particular, the case illustrates how an indirect prohibited transaction can disqualify a self-directed IRA.

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