Updated: August 9, 2026

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Direct mail flyers, radio spots, and coin dealer websites still describe home storage gold IRAs as an IRS approved way to keep retirement metals at home. One published Tax Court opinion closes that argument on the public record. It is McNulty v. Commissioner, 157 T.C. No. 10, decided November 18, 2021.

This piece walks through the facts, the court’s reasoning, and the tax bill the taxpayers ended up with. It is a case study, not a promotion. No dealer is recommended in these pages. The goal is to put the leading precedent within reach of a household making a real custody decision.

Table of contents show

The case at a glance

Andrew and Donna McNulty petitioned the U.S. Tax Court after receiving an IRS notice of deficiency covering tax years 2015 and 2016. Donna McNulty had funded a self-directed IRA, transferred those funds into a single-member limited liability company owned entirely by the IRA, and used the LLC to buy American Eagle gold and silver coins.

The coins were shipped from a bullion dealer to her Rhode Island residence and kept in a personal safe. The Commissioner treated the coin values as ordinary income distributions in the year of receipt. The court, in an opinion by Judge Goeke, sustained the deficiency and the accuracy-related penalty. The reported citation is 157 T.C. No. 10 (Nov 18, 2021), Docket No. 1377-19.

What the facts show

Donna McNulty rolled prior retirement balances into a self-directed IRA held by a specialist custodian. She then organized a single-member LLC named Green Hill Holdings LLC under Rhode Island law. The IRA held 100 percent of the LLC membership interest. Donna served as the sole manager of the LLC with full signature authority over its bank account.

The LLC used its bank account to place two orders for American Eagle coins with a bullion dealer that marketed a home storage arrangement. The coins were delivered to the McNulty residence in Rhode Island. They were stored in a personal safe alongside the household’s separately owned bullion.

Donna also took a small cash distribution from the IRA in one of the years, which the McNultys reported on the return. The coin purchases were not reported as distributions. The couple treated the LLC as the record holder and the residence as an incidental storage location.

Timeline of events and audit

In 2015, Donna took delivery of a first tranche of American Eagle coins valued at roughly $10,000. In 2016, a larger delivery followed, with a fair market value close to $263,000. Both deliveries went to the Rhode Island home. The IRS audited the two returns and issued a notice of deficiency.

The notice recharacterized the full fair market value of the coins as ordinary income distributions in the year each delivery occurred. The IRS added the 20 percent accuracy-related penalty under IRC Section 6662. The McNultys petitioned the Tax Court in January 2019, and the case was submitted on stipulated facts. The published opinion issued in November 2021 sustained the Commissioner on both the deficiency and the penalty.

How the court reasoned

The court began with the statutory text of IRC Section 408(m). Subsection (m)(1) treats an IRA acquisition of a collectible as a distribution equal to the cost. Subsection (m)(3) carves out a narrow exception for specified U.S. coins and for bullion at defined fineness. The exception ends with a conditional clause: the bullion must be “in the physical possession of a trustee described under subsection (a).”

The court then read Section 408(a), which defines the trustee as a bank or a person approved by the IRS in writing under Treas. Reg. 1.408-2(e). The court noted that a private individual, or an LLC formed by that individual, does not become a Section 408(a) trustee by state law formation. Fiduciary status is a federal approval, not a state entity filing.

The court then addressed the taxpayer’s control over the coins. Donna, as sole LLC manager with unfettered access to the coins in her personal safe, held IRA-titled property directly. The LLC layer did not interpose a fiduciary between her and the metals. The physical possession requirement of Section 408(m)(3) was not met on the facts of record.

The opinion cited the long-standing rule that an IRA owner who takes personal possession of IRA property has received a distribution. The court declined to treat state law entity separateness as sufficient to defeat that rule when the entity is wholly owned and wholly controlled by the same individual.

The tax bill and penalties

McNulty v. Commissioner tax bill: $10,000 in 2015 coin delivery reclassified as ordinary income, $263,000 in 2016 coin delivery reclassified as ordinary income, roughly $270,000 in combined deficiencies and accuracy-related penalties across both years — Source: McNulty v. Commissioner, 157 T.C. No. 10 (November 18, 2021).

The financial cost stacked in three layers. First, the fair market value of the coin deliveries was recharacterized as ordinary income in the year of receipt. That produced additional income of roughly $10,000 in 2015 and roughly $263,000 in 2016. Second, the Section 6662 accuracy-related penalty applied at 20 percent of the underpayment for both years.

Third, while the opinion did not directly assess the Section 72(t) early-distribution tax, taxpayers under age 59 and a half in a comparable fact pattern would face a further 10 percent add-on. Combined, the deficiencies and accuracy penalty added roughly $270,000 to the McNulty tax obligations across the two years. The IRA wrapper on the coin holdings was gone.

The court also declined the reasonable-cause defense on the accuracy penalty. Reliance on a promoter’s marketing materials was not treated as reasonable cause. The taxpayers had not obtained independent competent tax advice before entering the arrangement.

Why the LLC layer collapsed

The marketing theory rested on treating the LLC as a distinct person under state law. The IRS and the court applied a different lens. Section 408(a) trustee status is a federal fiduciary designation with an audited application process under Treas. Reg. 1.408-2(e). A single-member LLC formed by an IRA owner has not passed that application, and the state secretary of state does not opine on federal fiduciary status.

The second failure point was operational. The IRA owner held the sole manager position, signed all disbursements, and held the physical safe key. That degree of dominion and control over IRA-titled assets is inconsistent with the statute’s requirement that a qualifying trustee hold the metals.

The court’s holding does not turn on whether the LLC was properly formed under Rhode Island law. It turns on whether the arrangement placed the metals in the physical possession of a Section 408(a) trustee. It did not.

What McNulty means for retirement savers today

The decision is a regular Tax Court opinion, which carries full precedential weight and is cited in later IRS audit correspondence on home storage arrangements. It closes the marketing theory that a single-member LLC owned by an IRA can serve as the Section 408(m)(3) trustee. The theory rested on state entity separateness. The court’s reading of the statute rested on federal fiduciary status.

Any household considering a home storage or checkbook LLC structure for IRA-titled precious metals is now on notice. The IRS has a published opinion supporting a full deemed distribution on the coin balance, plus the 20 percent accuracy penalty, plus the 10 percent early-distribution tax when applicable. The IRA wrapper does not return once collapsed.

Common misreadings of the case

Three misreadings surface most often in dealer marketing after the decision. The first is that McNulty applied only because the coins were not sufficiently segregated. The court did not turn on segregation. It turned on the identity of the person in physical possession of the coins.

The second misreading is that a bank safe deposit box in the IRA owner’s personal name would have cleared the case. It would not. The Section 408(m)(3) trustee prong requires that a bank, or an IRS-approved nonbank trustee, hold the metals in its fiduciary capacity for the IRA. A personal-name safe deposit box is not a fiduciary holding.

The third misreading is that using a larger or multi-member LLC would fix the structure. The court’s holding turned on the taxpayer’s unfettered access to IRA-titled coins, not on the LLC’s headcount. A multi-member LLC would not remedy the underlying problem when the IRA owner still controls physical custody.

Related IRS guidance and Section 408

The statutory framework the court applied is set out in IRC Section 408, published in the federal code and mirrored in the annual editions of IRS Publication 590-B. Publication 590-B, in its discussion of distributions and collectibles, treats an IRA investment in bullion as a deemed distribution unless the depository requirement is met.

The IRS also maintains a public list of approved nonbank trustees on its website. That list is the operational baseline for any custodian claim of Section 408(a) status. A dealer or promoter that cannot point to a bank or a name on that list as the record trustee is outside the framework the McNulty court applied.

For readers screening the marketplace against these criteria, the OPRS review of gold IRA dealers to avoid catalogs the red flags that surface at the vetting stage, including any pitch that shifts custody of IRA metals to a residential safe.

The takeaway

McNulty is short as landmark opinions go, and it reads plainly on the page. The court did not need to write novel doctrine. It applied Section 408(m)(3), Section 408(a), Treas. Reg. 1.408-2(e), and the personal receipt rule to a set of facts that had circulated for years in home storage marketing.

The result was a roughly $270,000 total exposure across two years and a permanent loss of the IRA wrapper on the coin holdings. A retirement saver whose account balance is meaningful cannot afford to test the same theory. The statute is clear. The court has ruled.

Any structure that puts IRA-titled precious metals into the household’s physical possession, whether through a home safe, an LLC-controlled safe, or a personal-name safe deposit box, sits on the wrong side of the case. The compliant path is a Section 408(a) trustee holding the metals at an IRS-approved depository, on the record, from the day of purchase forward.

McNulty v. Commissioner: the Home Storage IRA Case Every Retirement Saver Should Read