All Forum Posts by: Bryce Carroll

 Thanks Chris, I'll give them a try

Appeal rejected, heading to tax court. 5 figure case.

I distributed a rental property from my SDIRA in 2020 as a cares act withdrawal. There was a mortgage on the property. The irs wants taxes, penalties, and interest for the banks portion of the property (the non-recourse loan). My taxes were flagged because the IRA put the gross appraised property value into the 1099R taxable amount box (ie not considering the lien). They also checked box 2b which says "Taxable amount not determined", but the IRS has ignored that check and focused on the taxable amount for the deficiency.

Does anyone have any guidelines, a court case, lawyer recommendations, etc. that could help me defend myself in court? The IRS wants something in writing: the appeals officer asked under what authority should the lien be considered in the distribution, then denied the appeal when my CPA suggested we compare it with the distribution amount if the property was sold and the note was called due.

Other similar like-kind distribution examples would be helpful to. If a like-kind property is distributed from an estate when someone passes, the estate tax value doesn't ignore the lien. Is there other like-kind distributions where the lien is considered that I could liken this to? It would be really helpful if there is tax code or written rules I could provide the IRS.

Any help or recommendations are appreciated, thanks!

I reached out to KKOS Lawyers and they responded that this is isn't something they'd be able to address. They also didn't have any recommendations. 

Anyone other recommendations?

I'm also looking for any help from anyone who may have any information on how this situation should be handled. Is there any guidelines or cases where an IRA distributed a property and the IRS demanded taxes for the lien/3rd party interest.

Hi Dmitriy, unfortunately uDirect has refused, and they have not responded to my last several emails.

More bad news, my appeal was denied and the only path forward is to pay taxes, penalties and fees, or defend myself in tax court.

Is there any chance you can point me to the guidelines your IRA custodian is following when you received the response:

"On this a direct real estate with a liability. We would take the appraised value, Minus the outstanding liability, times the % of the distribution."

I'm looking for anything that I can provide to a federal judge to defend myself in court over this matter. Let me know if you have any recommendations of people knowledgable that may be able to provide details to help mount a defense. Even a statement from the IRA administrator would  be a big help if I could present it in court.

Appeal rejected, heading to tax court. 5 figure case. 

I distributed a rental property from my self directed IRA in 2020 as a cares act withdrawal. There was a mortgage on the property. The irs wants taxes, penalties, and interest for the banks portion of the property. A mortgage is the same as income right? (Facepalm)

Any recommendations? Thanks!

Appfolio just took thousands from me via emails saying a payment was rejected for 12/2022, 1/2023, etc. Apparently a tenant was paying using echecks that were stolen. Whoever they were "stolen" from opened an investigation 15 days before 12/2023 hit (1 year), and appfolio has clawed all that money back. That tenant paid legally as far as I know for over a year before this happened (ie 2021-2022). 

It is news to me that appfolio could reach that far back and take my kids college fund in this way. Is there any options here? It makes me not want to trust appfolio ever again, because if this had been caught within 60 days (which would be required of me if someone had stolen my credit card), the damage wouldn't be 5 figures. I have a pm that manages the property, the tenant passed screening without red flags. Is there anything they or I can do, aside from collections which likely won't yield anything (that's been my experience over the last 15 years with bad tenants)?

@Dmitriy Fomichenko
I'm working with an IRS appeals officer on this tax court case. The appeals officer said she can't find anywhere it's written down that I should not be taxed for the full property market value ie the debt would be ignored. Do you know of a statute or under what authority I can point her where it is written down that I should be taxed on the net (market value minus debt), not the market value?

It seems obvious that I should not be taxed for money that I didn't make, but the appeals officer disagrees and requires a section in tax code that states this.

The final answer from Udirect is:

It is not the custodian’s responsibility to determine the taxable amount which is confirmed by the 1099r instructions

I disagree, because the instructions say:

Box 2b. Taxable Amount Not Determined Enter an “X” in this box if you are unable to reasonably obtain the data needed to compute the taxable amount.

The custodian signed the closing docs that included the loan, received and forwarded all the mortgage statements, and paid the mortgage monthly. It seems they have all the data needed, they just have chosen not to. I'm interested to hear opinions on if there's anything I can do given they're refusing to fix it, and it doesn't sound to me like they completed it as instructed, because from the instructions it sounds like it is their job to compute the correct taxable amount? 

Also, any suggestions on good self directed IRAs where I could roll the rest of my assets to, from out of the Udirect account?

The IRA generated the distribution form. Another thing that I assumed I could rely on the IRA's experience and expertise, but it sounds like it wasn't done correctly.

Thanks for all the feedback and passionate/helpful insight; I've reached out to Udirect and I am awaiting their response. Hopefully they can help provide something that will swing things back to fair in the tax court petition..

They put the gross value of the property on that firm with no mention of the mortgage