For years, some companies marketed a structure that seemed to square an impossible circle: keep the tax advantages of an IRA while holding the IRA's gold coins in your own hands. The vehicle was a "checkbook control" IRA, in which the IRA owns a single-member LLC, the account owner manages the LLC, and the LLC writes the checks. Applied to precious metals, the idea went one step further: since the LLC buys and holds the gold, the owner could store it personally without triggering a distribution.
In November 2021, the United States Tax Court examined exactly that arrangement and rejected it. McNulty v. Commissioner, 157 T.C. No. 10 (2021), held that an IRA owner who took physical possession of American Eagle coins purchased through her IRA-owned LLC had received a taxable distribution of the coins' full value, and the court sustained accuracy-related penalties on top of the tax.
This article looks at the checkbook LLC structure itself: how it was marketed, what the Tax Court actually said, and why the reasoning matters for anyone who still encounters the arrangement today. The general case against keeping IRA metals at home, including what compliant depository storage looks like, is covered in Gold IRA Storage Rules: Why Home Storage Is a Problem; here the focus is the LLC wrapper and the court decision that tested it.
The Structure: Checkbook Control Over IRA Metals
A checkbook IRA starts with an ordinary self-directed IRA, the flexible account type explained in What Is a Self-Directed IRA? The Account Behind Every Gold IRA. The IRA then invests essentially all of its assets in a newly formed single-member LLC, and the account owner appoints herself as the LLC's manager. From that point on, the owner controls the LLC's bank account directly. She can sign contracts, wire funds, and buy assets without routing each transaction through the custodian.
Applied to gold, the arrangement was sold as "home storage gold IRA" kits that bundled the LLC formation documents, an operating agreement, and instructions for buying metals in the LLC's name, with setup fees that could run into the thousands of dollars. The advertised benefits were the elimination of annual custodian and depository storage fees and the appeal of keeping the coins in a safe at home. Some kits even suggested that the arrangement was "IRS approved."
The structure is not inherently impermissible for every asset class. Checkbook LLCs have long been used by self-directed IRA investors in areas like real estate, where the LLC holds title to property and the owner manages it. Whether that works cleanly is its own tax question. What McNulty established is that the analysis changes when the asset is precious metal and the owner takes it home.
What the Tax Court Ruled in McNulty
The facts in McNulty v. Commissioner, 157 T.C. No. 10 (2021), tracked the marketing materials almost exactly. The taxpayer established a self-directed IRA, the IRA funded a single-member LLC that she managed, and the LLC used roughly $411,000 of IRA money to buy American Eagle coins. She stored the coins in a safe at her home.
The Tax Court held that she received a taxable distribution equal to the coins' full value in the years she took possession. The court's reasoning turned on control and custody, not on labels. An IRA's assets are supposed to be held by a fiduciary; independent oversight of the account owner is a basic feature of the IRA arrangement. When the owner of the IRA has unfettered physical possession of the IRA's coins, there is no fiduciary between her and the asset, and the statutory scheme is defeated. The LLC wrapper did not change that conclusion, because the owner, as the LLC's manager, was simply holding IRA assets herself with extra paperwork in between.
The court also upheld accuracy-related penalties. The taxpayer had relied on the promoter's website rather than obtaining independent professional advice, and the court found that reliance unreasonable for a transaction of that size.
| Marketing claim | What the Tax Court said | |---|---| | The LLC, not you, owns the metal, so possession rules are satisfied | Owner possession of IRA coins is a distribution; the LLC does not insulate it | | Storing the coins at home is permitted if the paperwork is right | Physical possession by the owner defeats the fiduciary requirement regardless of documents | | The structure is "IRS approved" | No approval exists; the arrangement produced tax on the full value plus penalties | | Relying on the promoter's materials is enough | Reliance on a promoter's website was not reasonable cause; penalties applied |
Why the Structure Fails for Metals Specifically
The legal core is IRC 408(m)(3). IRAs are generally barred from holding collectibles, and coins and bullion are collectibles by default. Section 408(m)(3) carves out an exception for certain coins and for bullion meeting purity standards, but the bullion exception carries an explicit condition: the metal must be in the physical possession of a trustee, meaning a bank or an IRS-approved nonbank trustee. A single-member LLC managed by the account owner is neither, and a home safe plainly is not.
That is why the checkbook structure can be defensible for some self-directed assets and still collapse for metals. An LLC that holds a rental property does not put a statutory possession requirement in the owner's hands; a shrink-wrapped tube of coins in the owner's safe does. The asset class itself carries a custody condition that the structure cannot satisfy once the owner takes delivery.
Prohibited transaction exposure stacks on top. An IRA owner is a disqualified person with respect to her own IRA, and self-dealing between the owner and IRA assets can disqualify the entire account, not just the amount involved. The mechanics of that separate risk are laid out in Prohibited Transactions in a Gold IRA: Rules to Know. In McNulty the court resolved the case on the distribution theory without needing to reach prohibited transactions, but the exposure is real in these arrangements.
The consequences follow the usual distribution math. The deemed distribution is ordinary income at fair market value in the year of possession. If the owner is under age 59 1/2, the 10% additional tax on early distributions generally applies as well. Accuracy-related penalties, typically 20% of the underpayment, can attach on top, as they did in McNulty. And the metal itself remains an asset whose price fluctuates and can lose value; the tax bill does not adjust downward if the coins are worth less by the time the IRS assesses it.
What to Do Instead
LLC formation packages for IRA metals are still marketed today, sometimes with the suggestion that the decision was limited to its facts. The IRS has not approved any home storage arrangement, and the Tax Court's reasoning applies to owner possession of IRA metals generally, regardless of the paperwork involved.
The compliant route is unglamorous: a custodian holds the account, an approved depository holds the metal, and you pay annual fees for both. Those fees are the operating cost of the tax advantage, and they are modest next to the outcome in McNulty, where the tax and penalties consumed a large share of the account in a single stroke.
If you are already inside a checkbook LLC that holds metals, or you bought a home storage kit, the practical step is to talk with a qualified tax professional now. Options such as moving the metal into compliant depository custody, correcting the structure, or reporting a distribution properly are easier to evaluate before the IRS raises the issue than after an audit letter arrives; acting early simply expands your choices.
The Bottom Line
The checkbook LLC structure promised custodian-free control of IRA gold, and the Tax Court tested it on clean facts. McNulty v. Commissioner, 157 T.C. No. 10 (2021), held that an owner's physical possession of IRA coins is a taxable distribution of their full value, with accuracy-related penalties, and that an IRA-owned LLC does not change the analysis. IRC 408(m)(3) conditions the bullion exception on trustee possession, a condition no home safe satisfies. The custodian-plus-depository structure remains the route that actually preserves the tax benefit, and anyone currently in a checkbook metals arrangement should review it with a qualified tax professional promptly.
GoldIRAFinder.com is a free, independent matching service, not a metals dealer, custodian, or tax adviser. If you want a gold IRA built on compliant custody rather than a workaround, get matched with trusted Gold IRA companies and ask each one to confirm, in writing, which custodian and depository would hold your metals and what the annual fees are.