No attorney is permitted to issue such a legal opinion.
Note: No IRA provider or competitor of Unchained should suggest you seek an opinion on audit risk, as federal regulations strictly prohibit attorneys, CPAs, and certain finance professionals from advising on whether a transaction increases your risk of audit.
If anyone has told you otherwise, we assume they’re acting out of ignorance of the relevant Treasury regulation rather than out of any ill intent on their part.
At Unchained, we strive to provide the most compliant IRA solution possible which still allows some level of private key control. If you’re a prospective client looking to learn more, you can schedule a free consultation with our team. Please consult your tax advisor if you have questions about your unique tax situation.
Why it’s illegal for an attorney to give an opinion on the likelihood of IRS audits:
The United States Treasury Department has banned all U.S. attorneys, CPAs, and certain other financial professionals from issuing any legal opinion on any matter that addresses the likelihood of audit from the Internal Revenue Service in a given transaction. Tax opinions must instead stick to addressing actual tax consequences of a structure or transaction. You can find this at 31 CFR 10.37(a)(2)(vi). This applies to all tax matters, not just IRAs. The regulation reads as follows:
"The practitioner must not, in evaluating a Federal tax matter, take into account the possibility that a tax return will not be audited or that a matter will not be raised on audit."
How the Unchained IRA is structured:
In an Unchained IRA, the IRA custodian (Solera National Bank) holds legal title to the bitcoin directly; there is no intermediary trust or LLC entity involved as there would be in a self-directed checkbook IRA. Solera executes a special tri-party agreement with Unchained and each Unchained client by which it delegates the responsibility for safekeeping private keys to both you (two private keys) and Unchained (one private key). The Unchained Terms of Service also further outline your responsibilities concerning delegated private keys.
While Solera does not have access to private keys directly, it does have access to the related public keys and wallet configuration such that it is aware of all transactions. Your vault is consistently monitored by the IRA custodian (through Unchained) such that no transaction can take place outside of the IRA custodian’s knowledge.
Private key control and McNulty:
We designed the Unchained IRA to give clients some private key control over their IRA bitcoin while providing transparency for tax reporting purposes. Legal questions around the Unchained IRA typically revolve around the McNulty case. The Unchained IRA was designed with McNulty at top of mind. We discuss this case on our blog. We also published a webinar asking the question: Are bitcoin IRAs legal?
Note: The contents of this post and linked materials are educational in nature and may not be relied upon as tax, legal, or financial advice, as they have not been tailored to you and have not been reviewed by any attorney, financial advisor, or tax professional. Various laws and regulations prohibit Unchained, or any other IRA provider, from providing you with tax advice on the consequences of transactions within any IRA. For any questions about your specific situation, please consult with your attorney, tax professional, and/or licensed financial advisor.