RMD and minority interest discounts

[Guest JPIngold]

I have a question that was posed to me by one of my tax partners. I have not seen it done, but wondering if anyone else has.

He has a client with a great deal of farmland in his IRA's and it is now RMD time. He is wondering if we can do one of two things:

1) Distribute farmland to the IRA owner and since the owner will not own a controlling interest in the land, subject the appraised value to a 15+/-% discount to reduce the amount of land necessary to be distributed; or

2) Establish a LLC to hold the land within the IRA and distribute LLC units from the IRA using 15+/-% discounts in valuing the LLC units.

My initial reaction is that I wouldn't touch it with a 10 foot pole without going in for an IRS letter ruling, but just wondering what others think.

Thanks.

James

[mbozek]

I have a question that was posed to me by one of my tax partners. I have not seen it done, but wondering if anyone else has.

He has a client with a great deal of farmland in his IRA's and it is now RMD time. He is wondering if we can do one of two things:

1) Distribute farmland to the IRA owner and since the owner will not own a controlling interest in the land, subject the appraised value to a 15+/-% discount to reduce the amount of land necessary to be distributed; or

2) Establish a LLC to hold the land within the IRA and distribute LLC units from the IRA using 15+/-% discounts in valuing the LLC units.

My initial reaction is that I wouldn't touch it with a 10 foot pole without going in for an IRS letter ruling, but just wondering what others think.

Thanks.

James

I believe that the IRS issued a PLR years ago denying valuation of property in an IRA based on a minority interest discount.