Self-directed IRA loan circle

[Andy Bauman]

So I had an idea this morning, curious if this is legal and/or recommended.

Here is my idea:

I have an LLC that operates my real estate investment business

I have a self-directed IRA LLC with about $40k

My friend has an LLP/LLC for his orthodontics practice

Let's say that he also has a self-directed IRA LLC with about $40k

Now let's further say that my self-directed IRA loans my friend $40K at 15% for 5 years. My friend's self-directed IRA loans my LLC $40K at 15% for 5 years.

This would allow me to write off loan payments from my LLC and shelter the interest. This would have the same benefit for him.

Legal?

Recommended?

Any downside (besides admin/maintenance fees)?