Wholesale Deal Earnest money & Self-directed IRA

[Pete Nater]

I found this too good to be true. Can anyone confirm it this it true? I heard a guy say that, if you fund the earnest money deposit on a wholesale deal, purchase agreement contract, (A to B) with a check from your self-directed IRA, that the entire wholesale fee you make (B to C), all of it, is profit, put back into your IRA. So if you make $50K as a wholesale fee, it's OK? with just $100.00? Can't be true, right?

Thanks

[Jon Holdman]

Its not just a matter of "funding the earnest money" from the IRA. Your IRA would be the one actually doing the wholesaling deal, not you.

This would be an active business, so the income would be subject to UBIT. The first $1000 is exempt. After $10,000 (yes, $10K) the rate is 35%. Its graduated below that. So, your IRA will have a significant tax bill for $50K of active income.