Corporate Transparency Act Ruled Unconstitutional

The new law known as the Corporate Transparency Act, which required LLCs and corporations to register its ownership and management with the federal government has been ruled unconstitutional by a federal Judge in Alabama in National Small Business United v Yellen. A small business owner in Alabama named Isaac Winkles and the National Small Business United (NSBU) association challenged the new law as outside the scope of the federal government’s authority and prevailed in Court. Judge Burke wrote in his opinion, “..the wisdom of a policy is no guarantee of its constitutionality.” The federal government is appealing the ruling, and this case will likely be fast-tracked to the U.S. Supreme Court because of its wide-ranging application to millions of small business owners.

What Does This Mean For LLC and Corporation Owners Right Now?

FinCEN, the federal government agency where ownership and management of an LLC or corporation are reported via a beneficial owner information report (BOI), issued a notice stating that the Court’s ruling only applies to the plaintiffs of the case. This includes Mr. Winkless and any LLC or corporation that is a member of the NSBU. For the millions of other small business owners, you must still file the BOI report. For new businesses set up in 2024, you have 90 days from the date the LLC or corporation was established to file your BOI report to FinCEN. For businesses established prior to 2024, owners have until Jan 1, 2025, to be compliant. Failure to file the BOI report may result in significant financial penalties and up to 2 years in jail.

If you are setting up a new LLC or corporation, you need to comply within 90 days. You will not be able to wait for the outcome of the appeals process, as this case likely won’t be fully decided until the fall at the earliest.

For entities set up before 2024, some business owners may decide to wait rather than file their BOI report now. While my advice would be to file anyway, as I believe the federal government will prevail in its appeal at the end of the day, some business owners may decide to wait to file until the appeal is decided. There will likely be a mad rush of BOI reports towards the end of 2024 as business owners try to comply with the ruling by the deadline.

What is the BOI Report Filing?

Our law firm, KKOS Lawyers, and our company compliance company, Main Street Business Services, have filed hundreds of BOI reports for our clients. The BOI report is essentially a disclosure document whereby every LLC or corporation must disclose anyone who owns 25% or more of the company and any person who has substantial control over the company (e.g., the president, manager, CEO). Each person’s name, address, and date of birth must be disclosed, and a copy of a government-issued photo ID must also be provided for each person. The BOI reports are not available to the public and can only be disclosed by FinCEN to federal or state law enforcement agencies. For a more comprehensive overview of the BOI filing requirement please check out my video here and view our corporate transparency guide here.

How to Disinherit a Child from your Estate?

What do you do when you have a child you’d like to disinherit from your estate? It’s not as easy as you think, so make sure you follow the proper procedures to specifically cut them out. Don’t just leave their name out of things and think that this will accomplish your goals as the laws in most states will presume you intended to have them be an heir unless you specifically state otherwise. Your children, along with your spouse (if you have one), are the presumed heirs to your estate by law in the absence of an estate plan. As a result, it is important to complete an entire list of your children in the estate plan and to specifically mention any child who will not be an heir to your estate by stating something like, “it is the intention of the settlor (you) to disinherit the following child from the estate.” It’s that simple; just make clear writing indicating that you specifically intend them not to be an heir to your estate and they’re out.

If you have a problem child who you still want to provide for but want some strings attached, you can add a lot of excellent restrictions and controls to the estate through a well drafted trust. For example, you could state that the problem child can’t inherit their share of the estate if they have a drug or alcohol addiction. You could also be specific about something in their life. Say you had a child with legal issues or that has creditors chasing them down. You could state that the trust will only distribute once the child has resolved issues in their lawsuit or with creditors. Many trusts will have a spendthrift clause that addresses creditor issues for all heirs but you can also make it specific to an issue an heir may have that you want resolved before they inherit.

It is important to note that a trust (or will) cannot be created and enforced to go against public policy, promote illegal activities, and promote tortuous acts. One of the common problematic clauses is one which requires a child to divorce their spouse in order for them to receive their inheritance. For example, you can’t say, “Johnny doesn’t get anything from the estate so long as he is married to Susie”. Many courts view this as a violation of public policy as it promotes divorce. As a result, avoid clauses such as these and seek the guidance of an attorney when adding clauses which disinherit or significantly restrict a child’s inheritance.

If you completed your estate plan but now you’d like to disinherit a problem child from your estate, consider having a lawyer review your documents. Or, if you know you are in need of a new plan, visit our website to learn more about our Estate Planning Special or simply to set-up an appointment with an Attorney at


New IRS 1099 Rule for PayPal and Venmo Targets Very Small Businesses and Will Cause Misreporting and Errors

FroMat Sorensen Entrepreneur Articlem my article on Entrepreneur

The IRS recently announced that payment apps such as PayPal, Venmo, and CashApp will be required to issue 1099s to small businesses and self-employed persons. Here’s what you need to know.

New rule is targeted at very small businesses and individuals with a side hustle

Starting in tax year 2022, payment apps will be required to report to the IRS total payments received by a business account in excess of $600 annually. This new requirement is clearly targeted at the smallest of small businesses and at individuals with a side hustle, as the prior rule only required a payment app to report when an account received more than $20,000 and had 200 or more transactions within the year. These micro-businesses that collect less than $20,000 a year previously did not fall under the 1099 rule, but will now be treated like every other business, large or small…

Read the article on Entrepreneur here.

Buying Crypto with an IRA

Buying Crypto with an IRA From my article on Cryptopedia

IRAs can own bitcoin and other cryptocurrencies. Crypto IRAs offer many advantages, the first and foremost reason being that the gains made on selling crypto with an IRA are generally not taxable. And if you have a Roth IRA, the profits come out entirely tax-free at retirement (age 59 ½). For traditional IRAs, the gains are tax-deferred, and owners are taxed as they draw funds out at retirement. These tax outcomes apply to Roth IRAs and Traditional IRAs when buying and selling stocks or mutual funds as well as crypto.

Read the article from Cryptopedia here.

IRA/LLC Owner Faces Distribution After Storing Precious Metals at Home



A recent Tax Court case, McNulty v. Commissioner, held that a self-directed IRA owners “…[personal] receipt of the AE [American Eagle] coins constituted taxable distributions equal to their purchase price.” In this case, Donna McNulty established a self-directed IRA and invested those IRA funds into an LLC where she was the manager. She then established a bank account for the LLC. The IRA funded this bank account with cash and then the LLC bank account was used to purchase precious metals. The precious metals were then subsequently shipped to and stored at Mrs. McNulty’s personal residence in her personal safe.

The IRS challenged Mrs. McNulty’s personal possession of the precious metals stating that personal possession violated IRC 408 and said that, “Mrs. McNulty’s receipt of the AE coins constituted taxable distributions equal to their purchase price.”

The IRS has been of the opinion, and we have long communicated to our clients, that home storage of precious metals via an IRA owned LLC violates the IRA rules under IRC 408. See the IRS Announcement and my article from 2016 on the subject, here. Some IRA custodians and non-licensed companies promoting precious metals IRAs have argued that you can have personal possession and can personally store specifically approved coins, such as American Eagle Gold Coins, by using an IRA/LLC structure (aka, checkbook IRA). This argument for specifically approved coins was based on some ambiguity in the law surrounding storage requirements for precious metals and IRAs in IRC 408(m). We’ve always believed IRA precious metals home storage was an aggressive strategy and one we advised against for the reasons the IRS and the Tax Court expressed in the McNulty case.

I have seen some providers of solo 401(k)s and other alternative strategies claim that, “checkbook IRAs are illegal.” This is great clickbait – but terrible content and advice as the court did not say that checkbook IRAs (aka, IRA/LLCs) are illegal. That was not part of their holding nor was it a part of the case from the IRS.  The holding in the case was specific to a distribution of precious metals stored personally by the IRA/LLC owner.  Please talk to your attorney, CPA, or licensed tax professional at to the details of the case and its impact on your IRAs investments. For our clients, our advice remains the same – don’t personally store your IRA or IRA/LLC precious metals at your home or in your personal possession.

The Court’s opinion can be found at the link below.

McNulty V Commissioner Precious Metals Storage and IRA owned LLC Checkbook IRA

Non-Wealthy IRA Savers Who Invested IRAs Into Small Business, Startups and Real Estate LLCs Targeted in ‘Build Back Better’ Plan

Non-Wealthy IRA Savers From my article on Entrepreneur

The proposed $3.5 trillion budget-reconciliation package still working its way through Congress contains two provisions that will restrict IRA investments into startups, small businesses, and real estate LLCs. These provisions came as a surprise to the over one million IRA investors who already invest a portion of their IRA into these non-publicly traded assets. The problematic sections, 138312 and 138314, change more than 40 years of IRA laws and practice, which have allowed IRAs to invest into publicly traded companies as well as privately held small businesses, LLCs, real estate, and startups…

Read the article on Entrepreneur here.