Can an LLC Own Precious Metals?
Precious metals have traditionally existed within an uncertain legal sphere. How you store your precious metals was an integral factor.
Some individuals purchase gold IRAs and store the physical coins at home; the IRS strongly discourages this practice.
Tax court officials recently made their ruling against husband and wife who stored precious metals at home as self-directed IRA/LLC accounts.
Precious metals have long been attractive investments for investors because of their stability against economic or monetary policy changes, making them a good addition to a portfolio that may also include riskier investments like stocks, real estate or mutual funds.
Holding metals in an LLC ensures a clean chain of title, and provides protection from creditors to a certain degree under state and federal laws.
Many people turn to an LLC owned by their IRA in order to buy and store precious metals without incurring custodianship fees, but must abide by IRA rules when it comes to storage – meaning not at home as doing so could constitute distribution and subject you to a 10% penalty if under 59.5 years old.
Precious metals are classified by the IRS as collectibles rather than financial assets and thus do not fall under capital gains taxes. However, any profits generated from selling physical precious metals can be subject to tax depending on the difference between their purchase and selling price.
Tax-smart investing may include opening a gold IRA LLC or Self-Directed IRA, similar to Traditional or Roth IRAs but offering you greater investment flexibility such as real estate or promissory notes as well as stocks, bonds, mutual funds or precious metals.
Additionally, LLC structures allow you to handle your transactions independently and eliminate fees that tack on at every purchase transaction. Without an LLC owned IRA however, your custodian will likely charge transaction fees on every purchase you make or impose a yearly report fee on which includes reporting and paying your taxes.
Precious metals offer investors tangible assets they can hold and touch, providing peace of mind in a world where privacy has become less of an asset class. Investing in precious metals could give investors comfort knowing their wealth remains tangible in this digital era.
Gold and other precious metals also offer another significant benefit in that their values do not follow stock market movements as closely, providing an excellent way to protect yourself against economic instability.
Physical possession of precious metals comes with additional costs, including storage and insurance premiums. Storing your IRA precious metals at home might seem like an attractive solution; however, according to IRS regulations qualifying precious metals must be stored with a depository. Safe deposit boxes can also be an option; however this leaves your bullion exposed to banking system operations and introduces potential issues related to inadequate coverage and liability issues.
Chain of Title
Many are led to believe that having precious metals held in an IRA-owned LLC is safer than keeping them stored at home, yet this is an inaccurate and dangerous assumption.
Precious metal dealers are financial institutions subject to FinCEN regulations. Any transaction in which physical possession of metals is relinquished for money or property constitutes a taxable sale – this includes both allocated storage of coins or bars and unallocated percentage interests in pools of gold, silver or platinum bullion coins and bullion.
When precious metals are held by an LLC and the chain of title is clear, a judgment creditor would require hiring a Wyoming attorney in order to seize them and may only obtain a charging order; this allows the creditor to receive any monies made when the precious metals are distributed.
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