Revenooer Rants: Get on the ball if you want to ‘borrow’ from your IRA
August 6, 2014
As we recently mentioned, there has been some confusion over the application of the "60 day rule," pursuant to which a bloke can temporarily access his IRA dough for whatever purpose he wants, as long as he replaces the funds within a 60-day period.
And the law has long stated, that one can only invoke this rule once in any 12 month period.
Historically, IRS has applied this rule to each IRA owned by a taxpayer. Many folks have IRA funds in the custody of any number of holding agents, and have been allowed to "borrow" from one or more of them every 12 months.
But a recent decision of the Tax Court suggested that the "once every 12 month" rule applies to all IRAs in the aggregate.
So that's the Revenooers position now — however, to give all of we and thee some time to adjust to this new interpretation of the law, IRS has stated that the old rule will remain for any rollover which occurs before Jan. 1, 2015. So if you want to take advantage, act now.
Now hear this, if you're an investor in a large partnership, such as a hedge fund: Recent GAO testimony before Congress suggests that the number of large partnerships has grown significantly in recent years, and that IRS has audited only a few, and collected a paltry amount of tax from these audits.
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There is no literal definition of a "large partnership," but a rule of thumb is that such an entity has 100 or more partners, and $100 million or more in assets.
Info available from the Revenooers suggests that the number of "large partnerships" has more than tripled in the last few years, and IRS audits have covered only 0.8 percent of them in 2012, compared to 27.1 percent of large corporations.
Most of these "large partnership" audits resulted in no change to the partnership's reported net income, and those that did resulted in average audit adjustments to net income of only about $1.9 million.
Needless to say, the Revenooers have all sorts of explanations of its conduct in this area, not the least of which, of course, is that their budget is just too darned small.
And speaking of partnerships — notably those operating as limited liability companies in California — here's a further bit of annoying news.
The Franchise Tax Board recently issued a legal ruling which more or less confirms its previous position regarding which of these entities and their members must file and possibly pay in California.
FTB reiterates that out-of-state LLC members are required to file a California return if:
The LLC is "commercially domiciled" in California.
The LLC is considered to be "doing business" because it is actively engaged in activities for financial or pecuniary gain; or.
The LLCs sales, property or payrolls exceed certain thresholds.
CONSULT YOUR TAX ADVISER – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation. Jeff Quinn is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He welcomes comments at firstname.lastname@example.org.