Roth IRA investment

[Guest Dave38Ca]

I purchased an option on a mobile home park for $1000.00 and sold the option for $10,000.00, Is this a fully tax free event?

[John G]

You did not provide much detail on how or where this transaction occured. The answer to your question ussually will depend if the original investment was made within an IRA or ROTH IRA. If your custodian allowed this investment as part of your account and all transactions were completed by the custodian, I believe you are fine. Custodians rarely will allow you to make an illegal transaction as they have a fiduciary responsibility.

If the transaction was done outside of the IRA, then it can not be transfered into the shelter.

What custodians will allow will vary from firm to firm. Custodians will NOT allow investments that will expose the account to unlimited liability. Many will have problems with any investment that they would have trouble providing a year end valuation. The IRS has additional rules, but in my experience custodians are more constraining because they tend to rule out oddball investments as too labor intensive and too risky for them.