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A partnership is an arrangement where entities and/or individuals agree to cooperate to advance their interests. In the most frequent instance, a partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits or losses. Partnerships are also frequent regardless of and among sectors. Non-profit organizations, for example, may partner together to increase the likelihood of each achieving their mission. Governments may partner with other governments to achieve their mutual goals, as might religious and political organizations. In education, accrediting agencies increasingly evaluate schools by the level and quality of their partnerships with other schools and across sectors. Partnerships also occur at personal levels, such as when two or more individuals agree to domicile together. Partnerships between governments, interest-based organizations, schools, businesses, and individuals, or some combination thereof, have always been and remain commonplace.

Partnerships have widely varying results and can present partners with special challenges. Levels of give-and-take, areas of responsibility, lines of authority, and overarching goals of the partnership must all be negotiated. While partnerships stand to amplify mutual interests and success, some are considered ethically problematic, or at least debatable. When a politician, for example, partners with a corporation to advance the corporation’s interest in exchange for some benefit, a conflict of interest may make the partnership problematic from the standpoint of the public good. Developed countries often strongly regulate certain partnerships via anti-trust laws, so as to inhibit monopolistic practices and foster free market competition.

Some general rules regarding self-directed partnership investments in a Self-Directed IRA:

  • The partnership agreement must permit an individual retirement account or a qualified IRA to be a partner.
  • The partnership must comply with the appropriate state law, have a determinate life, and be assignable.
  • The partnership subscription agreement must be signed by you as having been read and approved.
  • Partnerships may be subject to unrelated business income tax (UBIT) and other taxes. It’s important to consult your tax advisor for proper direction.

PLEASE NOTE: As a client of Horizon Trust, Inc., or any other self-directed custodian, it is completely your responsibility to investigate each and every investment that you make. Horizon Trust cannot and does not provide any protection from a poor or improper investment. Make sure you know what you are investing in, with whom you are investing, and what investments may constitute a violation of IRS code with regard to Individual Retirement Accounts.