"[A]n attorney for Mr. Ellis formed CST Investments, LLC (CST), to engage in the business of used automobile sales ... The operating agreement contemplated that Mr. Ellis's IRA would provide an initial capital contribution of $319,500 in exchange for a 98 percent ownership in CST ... Mr. Ellis's IRA did not exist at the time CST was formed.... [H]e received [the funds] from a 401(k) that he had established with his previous employer, and he deposited the amount in his IRA.... To compensate him for his services as general manager, CST paid Mr. Ellis a salary of $9,754 in 2005 and $29,263 in 2006.... If a disqualified person engages in a prohibited transaction with an IRA, the plan loses its status as an individual retirement account under Section 408(a), and its fair market value as of the first day of the taxable year is deemed distributed and included in the disqualified person's gross income.... The tax court properly found that Mr. Ellis engaged in a prohibited transaction by directing CST to pay him a salary[.]" [Ellis v. Comm'r of Internal Revenue, No. 14-1310 (8th Cir. June 5 2015)]

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