Prohibited Transactions Defined IRC 4975

What it is
- Improper use of an IRA by the IRA account owner, Beneficiary or any disqualified person

Who it involves
- IRA
- Disqualified person

Who is disqualified
- IRA account holder, spouse, ancestors, and lineal descendants
- Corporation, partnership, trust, or estate 50% or more of which is owned or controlled by another disqualified person
- The officers, directors, 10% or greater shareholders and partners, and
highly compensated employers of the above companies
- A fiduciary or person providing service to the IRA account

Prohibited Transactions Real Estate
Property cannot be owned prior to IRA purchase by:
- IRA account owner
- Spouse
- Family members (ancestors or lineal descendents)
- Other disqualified persons
Property cannot be lived in or leased by:
- IRA account owner
- Spouse
- Family members (ancestors or lineal descendents)
- Other disqualified persons
Property cannot be:
- Leased by the investor’s business
- Business cannot be located in or on any part of the property
- Property must be for investment purposes only

Prohibited Transactions
- Sale, exchange, or leasing of any property between the IRA and a disqualified person
- Transfer of the income or assets of the IRA to, or use by or for the benefit of, a disqualified person
- An act by a disqualified fiduciary whereby he/she deals with the income or assets of the IRA in his/her own interest or for his/her own account
- Receipt of any consideration for his/her own personal account by any disqualified fiduciary for any party dealing with the plan in connection with a transaction involving the income or assets of the plan.
- Lending money between the IRA account and a disqualified person or entity
- Furnishing of goods, services, or facilities between a plan and a disqualified person