South America, IRAs, and UBIT – OH MY!

DWQA QuestionsCategory: IllinoisSouth America, IRAs, and UBIT – OH MY!
Grant asked 2 years ago

Hey, Mat and Mark! Love the podcast. I left the teaching profession this year to work in my own business, and now I’m planning to roll over my pension contributions into a Roth IRA when I’m eligible to do so. I am interested in purchasing some agricultural land in South America in my self-directed Roth IRA and I have a question about UBIT.
For this deal that I’m considering, my IRA/LLC would purchase a plot land from an agricultural investment company. This company would plant crops on the land and hire a local management company to harvest and sell the crops for a period of 20 years. Each season, all net profits from my plot of land, after all fees and local taxes, would be paid back to my LLC. My questions are: (1) would this income to my LLC be subject to UBIT? And (2), since it’s a single-member IRA/LLC, at what point would my LLC need to file a tax return if the LLC doesn’t earn a profit for a few years? Thanks, guys.

1 Answers
Trysten Will Staff answered 2 years ago

Your question was answered by Mat and Mark on Directed IRA Podcast EP 71: Open Forum.