Digital Assets Explosion = Passive Power!

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“The Power of Passive: Profiting From Your Digital Assets”

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Influencers Radio with Jack Mize (opens in new window)

Tax Strategies, Wealth Building and Legacy Planning For Digital Entrepreneurs

The Family Trust Institute’s founder Jim Smyth, a pioneer in tax asset protection and legacy planning for digital entrepreneurs, joins Jack Mize on Influencers Radio to discuss rarely talked-about opportunities for using digital assets, such as email lists, info products and affiliate promotions to build wealth for retirement and beyond in the digital age.


Click arrow above to listen to radio interview.


Investing from IRAs, 401(k)s, CRTs, CLPs, and Other UBTI Environments

Passive investment environments are by definition not active income environments under the Internal Revenue Code.

How Is Your Facebook Page Like a Dairy Cow?

So long as your investment environment does not violate passive investment roles, digital assets like these have something in common with real estate, chickens, and dairy cows:

  • YouTube videos and channels
  • Websites
  • eBay products
  • Email lists
  • Twitter sites
  • Facebook pages
  • Information products
  • Software
  • Apps
  • Literary works
  • Music
  • Digital rights and libraries of information including PLR’s, and the licensing rights to all these

Digital assets also share similar relationships with bull semen and mating stallions! What is it that all of these have in common?

The Power of Passive!

Like those other active investment properties, digital assets you own can be passively leased, licensed, rented, and sold from a passive, tax-protected environment with great profitability — and they can be passively invested in for crowd funding long-term or market arbitrage appreciation. There are some rules, of course. The the digital assets cannot be actively marketed, actively developed, license to or actively sold by the owner of the IRA where the manager of the passive environment or by related party to the manager-owner. They can however be passively or administratively managed by the IRA owner and turned over to an active manager or promoter or marketer outside of the business who is unrelated. A separate agreement ensures control of active decisions without participation of the passive manager. DISC C Corps owned by Roths are also possible. This is supported by taxpayer wins to FISC challenges in the last several years by the IRS.

Which Came First – The Chicken or the Roth IRA?

Chickens That Lay Eggs Can Be Purchased By A Roth IRAChickens that lay eggs can be purchased by an IRA. This would include a Roth IRA. The IRA owner can’t care for the chicken, can’t feed the chicken, can’t plan for the harvest of the chicken. However, they can have an investment in the chicken and its eggs or a cow and its milk and benefit by an active manager who is unrelated to them. And this investment can provide very significant returns. Productive assets can be owned but they can’t be operated by the IRA/UBIT environment. They must be leased or licensed to a third-party active manager.

Cannot Be In Leasing Business

The UBTI environment prohibits one from being in the business of leasing. That requires doing so much leasing that it has become a business. Four to six transactions a year or happening at any one time, whichever amount is less, is a rule of thumb seen followed by practitioners. This is part of protecting a passive environment. So long as the leasing or licensing occurs with regard to a few assets at a time and these are passive investments owned by the IRA, without violation of self dealing or profited transactions rules, profitability can build nicely. Depending on the size of the IRA one might want a few large assets or a few small assets, but always assets that can offer an inordinate return, like email lists.

 

Receive Free Copy of Our Book!

“The Power of Passive: Profiting From Your Digital Assets”

We will soon release a short book that expands on this subject. To receive your free copy, just submit this short form: