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Coins Bought With Retirement Account Funds Considered Income

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Nov. 18, 2021, 10:12 PM

Coins held by a Rhode Island woman and purchased by an LLC using money from her self-directed retirement account were taxable distributions to her, and she owes penalties for failing to report them, the U.S. Tax Court ruled.

The case arose after Donna McNulty established a self-directed individual retirement account (IRA) and funded it through transfers from two qualified retirement accounts. She instructed the IRA’s custodian to use her IRA funds to buy membership interests in an LLC that she managed. She then directed the LLC to use nearly all the funds to buy American Eagle coins, which were …