Form 1120 Schedule G Part I

Client has a Self-Directed IRA (SDIRA) that has invested in their startup corporation (1120). The SDIRA owns 96% of the shares and the client and his wife each own 2% each. Since the SDIRA owns more than 20% I would expect to list the SDIRA on Schedule G Part I, but the entity is an IRA, which is not listed. Is it correct to list it as an IRA or a corporation?

IRS Instructions
Complete Part I if the corporation answered “Yes” to Form 1120, Schedule K, Question 4a. List each foreign or domestic
corporation, partnership, trust, or taxexempt organization that owns, at the end of the tax year, directly 20% or more, or
owns, directly or indirectly, 50% or more of the total voting power of all classes of the corporation’s stock entitled to vote. Indicate the name of the entity, employer identification number (if any), type of entity (corporation, partnership, trust, or taxexempt organization), country of organization, and the percentage owned, directly or indirectly, of the voting stock of
the corporation.

An IRA is a trust. See section 408(a).

Thank you

Client has a Self-Directed IRA (SDIRA) that has invested in their startup corporation

I would be very careful with this client. In fact personally I wouldn't even get involved with this due to the serious consequences if any mistake is made.

https://www.irs.gov/retirement-plans/ro ... ce-project

What is a ROBS? ROBS is an arrangement in which prospective business owners use their retirement funds to pay for new business start-up costs. ROBS plans, while not considered an abusive tax avoidance transaction, are questionable because they may solely benefit one individual – the individual who rolls over his or her existing retirement funds to the ROBS plan in a tax-free transaction. The ROBS plan then uses the rollover assets to purchase the stock of the new business.

Promoters aggressively market ROBS arrangements to prospective business owners. In many cases, the company will apply to IRS for a favorable determination letter (DL) as a way to assure their clients that IRS approves the ROBS arrangement. The IRS issues a DL based on the plan’s terms meeting Internal Revenue Code requirements. DLs do not give plan sponsors protection from incorrectly applying the plan’s terms or from operating the plan in a discriminatory manner. When a plan sponsor administers a plan in a way that results in prohibited discrimination or engages in prohibited transactions, it can result in plan disqualification and adverse tax consequences to the plan’s sponsor and its participants.