Bookkeeping For Roth IRA Owned Single Member LLC's ?

[Sharilyn Glover]

If one owned a single member LLC within their Roth IRA, and that entity invested exclusively in real estate, tax liens and debt instruments, would it not be acceptable to simply incorporate "grammar school" like accounting (how much IN versus how much Out). Being that the LLC is owned by a tax exempt entity it seems illogical to maintain the books in accordance with traditional taxable entity rules. Why income and expenses in a traditional manner (cost basis, calculating capital gains, depreciation, and deductible versus non-deductible debits) when there are no capital gains taxes due and there is no depreciation deduction or recapture? It seems like the bookkeeping guideposts to use would simply be tracking income/gains and expenses. At the end of each period (month, quarter or year) are we not simply interested in knowing how the account value increased and or how cash flow improved? After all, why adhere to the rules for baseball if your playing ping pong? In as much as most LLC articles of organization state that the entity's books shall be maintained in accordance with generally accepted accounting standards, what are those standards for the Roth IRA owned, single member LLC's investing in real estate, tax liens and other debt instruments? I look forward to hearing from ya'll. Thanks!

[Steven Hamilton II]

If you are going to be keeping a set of books you should be keeping a balance sheet and profit and loss statement like any other entity. The fact you opened an LLC encourages this for state purposes. I will mention my only concern would be if there is debt at all.

In order to maintain the sanctity of the LLC, by state law you should be maintaining those records appropriately for annual report purposes.

For debt instruments you need to maintain accurate records of payment etc. 

[Carl Fischer]

@Sharilyn Glover

Your points are well taken. It is simplified because the LLC is disregarded entity from IRS standpoint. @Steven Hamilton II makes good points which if debt is used then irs form 990t UBIT should be completed. If you go to sell it buyers like to review income and expenses.