Conflicting info asset valuation for in-kind RMD's from real estate

[John Cava]

Hi everyone,

I'm getting conflicting information from supposedly knowledgeable sources on this, so I wondered if anyone has been down this road and can direct me to a reliable info source.

I'm taking in-kind distributions from a SDIRA which is all in just one SF home. The question is this (numbers are just round for ease of calculation): Suppose the home is valued at $500K, and I took a $50,000 (10%) distribution last year, including what was owed for taxes. So then the house is 10% owned by The Person, and 90% owned by The LLC (income and expenses shared accordingly).

Now this year say I want to take the same percentage (10%) - and say it's a flat market and the house is still appraised at $500,000.  

When I report the value of the asset that I am taking the Distribution from, is it still $500,000, as per the current appraisal and receive $50,000? Or do I disregard the 10% portion owned by Me The Person, so I would take 10% of $450,000? In either case, The Person would now own 20% of the asset and the LLC would own 80%.

I've had authorities (not the IRS - that's my last resort) tell me both. Using the LLC asset only makes more sense to me, but I've heard it from tax attorneys for example that the appraised value is what's used each year, until The Person owns 100%, then it's game over.

If anyone has direct knowledge or first hand experience or can point me to a specific reference document (IRS perhaps?), I would greatly appreciate it!

Thanks,

John in Portland