Does anyone have experience in organizing and dealing with a foreign sales corporation as an asset of an IRA? I am especially concerned about prohibited transaction and valuation issues. Also would like to know about any experience in handling this type of asset.

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I have set up a number of IRAs for clients which invested in private investments.

With respect to having an IRA own a foreign sales corporation, the Tax Court case of James H. Swanson, 106 T.C. 76 (1996) suggests that it is permissible.

The application of the prohibited transaction rules to IRAs can be extremely complicated. The client should review the Swanson case and decide for himself/herself if he/she thinks it is sufficient authority to proceed with the transaction.

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Bruce Steiner, attorney
(212) 986-6000 (NY office)
(201) 862-1080 (NJ office)
also admitted in FL

Even though this is an old message I thought some people would enjoy some more information about FSC's in IRA's.

Yes, FSC's are an obscure issue; and, yes for 99.9999% of IRA's owners an irrelevant issue (myself included). But if you like to think about creative things that are done with some IRA's, on a scale from one to ten as "Spinal Tap" would say--this is an "eleven".

See the following article still posted at the Forbes mag web site:

http://www.forbes.com/forbes/1999/0531/6311278s1.html