1. © Copyright Mark J. Kohler, CPA, JD, P.C. 2006 www.kkolawyers.com Qualified Money and Real Estate Option 1 IRA $$ SDIRA $$ Raw Land - No Debt - No LLC/LP - No Partners - Direct Investment in name of IRA Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?

2. © Copyright Mark J. Kohler, CPA, JD, P.C. 2006 www.kkolawyers.com Qualified Money and Real Estate Option 2 IRA $$ SDIRA $$ Rental Property (Income Producing) Non-Recourse Loan Mortgage Company - Non-Recourse Debt - No Personal Guaranty - No Sweat Equity - No LLC/LP - No Partners - Direct Investment in name of IRA Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?

3. © Copyright Mark J. Kohler, CPA, JD, P.C. 2006 www.kkolawyers.com Qualified Money and Real Estate Option 3 IRA $$ SDIRA $$ Rental Property (Income Producing) Non-Recourse Loan Mortgage Company - Non-Recourse Debt - Single Member LLC - UDFI tax - No Personal Guaranty - No Sweat Equity - No Partners - Direct Investment in name of IRA Single Member LLC Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?

4. © Copyright Mark J. Kohler, CPA, JD, P.C. 2006 www.kkolawyers.com Qualified Money and Real Estate Option 4 IRA $$ SDIRA $$ 50% Limited Liability Co. or Limited Php. IRA Owner 40-45% Mortgage Company Guarantor Rental Properties 3 rd Party Owner 5-10% - Recourse Debt - YES - Partners -YES - LLC/LP- Yes Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?

5. © Copyright Mark J. Kohler, CPA, JD, P.C. 2006 www.kkolawyers.com Qualified Money and Real Estate Option 5 Self Directed 401K or Defined Benefit Plan 50% Limited Liability Company Mortgage Rental Properties Bs. Entity - Defer up to $44,000 in 2006 in 401K - Contributions vary for DB Plan IRA Owner 40-45% Guarantor 3 rd Party Owner 5-10% Limited Liability Co. or Limited Php. Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?

6. © Copyright Mark J. Kohler, CPA, JD, P.C. 2006 www.kkolawyers.com Self-Directed Plan Compliance Issues Must be Real Estate Operating Company if the Retirement Plan and IRA Owner own more than 25% of the LLC/LP See 29 CFR Section 2510.3-101 Can’t have 100% control of LLC/LP Prohibited Transactions Transactions with Prohibited parties Use of Property Compensation of IRA owner Administration duties Annual report/valuation to Custodian Bookkeeping and tax return BEWARE!! This is not a comprehensive list, and also requires a properly drafted Company document!! Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?

7. © Copyright Mark J. Kohler, CPA, JD, P.C. 2006 www.kkolawyers.com UBTI and UDFI Unrelated Business Taxable Income (“UBTI”) Exemptions for rental income, interest income, gains from sale of property other than property held for sale in the ordinary course of business. Unrelated Debt Financed Income (“UDFI”) Two Tier Analysis Real Estate Professional / Dealer Status Debt is the key calculation Trust Tax rates 990 Tax Return for IRAs, 5500 for 401ks ** This is only a survey of points to consider, these rules must be studied and implemented with care. Self-Directing Your Retirement Plan for Real Estate: What Can I Really Do?