However, the distribution is directly used when calculating the tax basis and the tax basis does have a huge say in how much of the income is taxable, so it may be considered indirectly taxable?

My opinion is that the impact will be indirect.

Your own sales pay the people in your "up-line", not so much to you, depending on the how high up you are in the "pyramid".In direct sales, you make money by selling product - this is your primary source of income.

To retain that tax-favored status all investments must be at arm's length and may not directly or indirectly intersect with you or other disqualified persons.If you know and understand an asset like multifamily, you can setup a self-directed IRA and invest in deals sponsored by others.

That is what you paid them for.Any quid pro quo arrangement where "I'll lend to you from my IRA if you lend to me from your IRA" would be a bad idea, as the IRS would view that as an indirect benefit to yourself and essentially loaning to yourself from your IRA.  

As several folks on this thread have commented... if you have the capital and the network to engage in direct private lending, you will generally have more control and a more secure asset such as a first deed of trust.

In your accounting divide expenses into Direct Variable, Indirect Variable, and Overhead.  

If I was a member of your LLC, I would want the property held in the name of the LLC, because that gives me indirect partial ownership of the property which can secure my investment.

The ironic part is that the attorney who I hired to represent me indirectly advice me to have the tenants sign the lead disclosure after closing - wow.

@Ben FreeburgSimply put, either your IRA or your property management company participates, but not both.If you try to use your property management company where your IRA is the owner, you will certainly be creating some kind of direct or indirect benefit between the plan and a disqualified party.