Paul wrote:
- quote -

I agree with your analysis in THIS case, but you seem to
be saying that a person cannot own the same stock as his
IRA. Perhaps that last sentence should be "he cannot be
a MAJOR shareholder".

The question of what happens if an IRA controls a
corporation is left as a hypothetical.....

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"doniam" <doniam[at]hotmail.com> wrote
- quote -

~His~ company, no. Someone else's company (I'll sell him
some stock in Paul, Inc if the money is good), yes.

He can not be a shareholder.

--
Paul A. Thomas, CPA
taxman at negia.net

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doniam wrote:

- quote -

That's a prohibited transaction. It would cause the IRA to
be reclassified to a non-IRA effective 1/1 of the tax year.
The whole balance, valued at FMV, in the account as of 1/1
is treated as a complete distribution. Assuming no cost
basis in the account, the whole amount would be taxable
income.

--
Alan
http://taxtopics.net

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Don't think it will work, but a friend wants to convert his
401k plan to an IRA (so far so good) and then buy stock in
his small non public corporation. My thoughts are that this
would be like the rule against making a loan to yourself
from the IRA

-Don

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