Target-State Blueprint · Two-Track Investment Architecture

Retirement & Personal Investment Structure

A two-track framework holding all investment activity in fully independent silos. The retirement track and the personal track share no common ownership and no inter-track activity — the §4975 firewall down the center is structural, not advisory.

Entity Map

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TRACK 1 · RETIREMENT TRACK 2 · PERSONAL mgmt svcs equity §4975 FIREWALL no common ownership no shared activity TAX-EXEMPT INVESTOR Self-Directed Retirement Acct SDIRA — Taxpayer or Spouse ↻ one blocker per operator C-CORP BLOCKER Main Holding C-Corp SDIRA ≤19% · single operator · absorbs UBTI/UDFI CHECKBOOK LLC Direct-Hold LLC No-UBTI deals only (bypasses blocker) SMLLC Operating Co. A → disregarded to blocker SMLLC Operating Co. B → disregarded to blocker SMLLC Operating Co. C → disregarded to blocker Direct Deal(s) passive · no debt-financing INDIVIDUAL OWNERS Family Members direct individual ownership C-CORP HOLDING Family Holding Company True holding · all personal investments S-CORP Management Co. Manages all Track 2 entities SMLLC Full-Control Hold disregarded to holding LLC · PARTNERSHIP Co-Owned Venture partner / operator Form 1065 Outside Partner unrelated operator LINES Ownership Mgmt / services Statutory firewall — never crossed ENTITY KEY Track 1 (retirement) Track 2 (personal) Conditional / direct-hold path

Structural Rules & Assumptions

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Track 1 — C-Corp blocker constraints:

  • Each SDIRA owns ≤19% of any single blocker (conservative buffer well under the §4975(e)(2)(G) 50% disqualified-person line).
  • One operator per blocker. A second operator's deals require a separately formed, separately owned blocker — replicate the structure rather than commingling operators in one C-corp.
  • SDIRA may be the taxpayer's or the spouse's — but see the open question below before assuming both can co-own one blocker.
  • Checkbook-LLC path is reserved for genuinely passive, un-leveraged, no-UBTI deals only.

Open question (flagged for ERISA counsel): Can the taxpayer's SDIRA and the spouse's SDIRA each own ≤19% of the same blocker? See discussion in chat — this is not yet resolved on the diagram.

Transition Workplan

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Current entity Current treatment Target position Action items Tax consequence / trigger Track
e.g. Existing operating LLC Disregarded to individual Track 2 — SMLLC under Family Holding C-Corp Contribute membership interest to holding; update operating agreement & EIN responsible party §351 / §721 contribution analysis; check built-in gain & debt-relief boot T2
e.g. Co-invest deal w/ operator Direct in IRA Track 1 — SMLLC under C-Corp blocker Form blocker; re-paper IRA's interest into blocker; confirm operator is not a disqualified person UBTI/UDFI exposure pre-blocker; §4975 disqualified-person screen; corp-level tax cost T1
T1
Firewall rule of thumb for the workplan: any action item that would put a Track-2 entity (including the management S-corp) in an ownership, fee, lending, or service relationship with a Track-1 entity is a non-starter — it likely triggers a §4975 prohibited transaction. When in doubt, the two tracks get separate counsel, separate bank accounts, and separate books.