IRA Financial Blog

Field Service Advice (#200128011)

FSA 200128011

In FSA 200128011 the IRS affirmed Swanson and stated:

“In light of Swanson, we conclude that a prohibited transaction did not occur under section 4975(c)(1)(A) in the original issuance of the stock of FSC A to the IRAs in this case. Similarly, we conclude that payment of dividends by FSC A to the IRAs in this case is not a prohibited transaction under section 4975(c)(1)(D). We further conclude, considering Swanson, that we should not maintain that the ownership of FSC A stock by the IRAs, together with the payment of dividends by FSC A to the IRAs, constitutes a prohibited transaction under section 4975(c)(1)(E).”

“Accordingly, this case should not be pursued as one involving prohibited transactions. We note, however, that similar transactions may be prohibited under section 4975, based upon the particular facts of such transactions. For example, while FSC A in this case is not a disqualified person, the owners of the IRAs are disqualified persons as fiduciaries with respect their IRAs and USCorp is a disqualified person with respect to the IRA owned by Individual A, the majority shareholder of USCorp. Thus, if a transaction is made for the purpose of benefiting USCorp, the IRA owners would violate section 4795(c)(1)(D). Also, if the facts were such that the IRA owners’ interests in the transaction because of their ownership of USCorp affected their best judgments as fiduciaries of the IRAs, the transaction would violate section 4975(c)(1)(E).”

Complete Field Service Advice (FSA #200128011)


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