Easy. He doesn't own the company, shareholders do, and he happens to be a shareholder. If you work for Microsoft, can you buy Microsoft shares in your IRA? Yes. This is why the IRS can't do squat about this. It's completely legal. If he owned a controlling interest (>50%) things would have been different.
If you bought the property as part of an incorporated entity, it would be entirely legal for you to do work or be contracted by that entity.
It specifically sweeps in classes of people with responsibilities that are held by typical active co-founders: "(H) an officer, director (or an individual having powers or responsibilities similar to those of officers or directors), a 10 percent or more shareholder, or a highly compensated employee (earning 10 percent or more of the yearly wages of an employer) of a person described in subparagraph (C), (D), (E), or (G)"
Very difficult to a) be a cofounder with meaningful equity b) not do any work so this provision doesn't trigger c) keep your equity and d) have it be worth anything.
Oh that is interesting. This must get very complicated for officers or directors of companies in the S&P 500. Could you not buy index funds that hold shares of the company you work for?
They probably just have to buy the shares in taxable accounts.
Edit: misread this. I would be surprised if index/mutual funds are subject to the same rules because holders of an index fund don't own shares in any of the underlying securities.
I have to assume you're just feigning naivete here.
First, officers or directors of S&P500 companies are almost definitely above the income level to open a new Roth IRA.
Second, you're really grasping at straws here trying to trace a relatively minuscule investment through mutual fund in order to defend Thiel here.
Someone is saying "Bank robbers are bad because they steal other people's money" and you're sitting over here saying "Well technically when I pick up a penny on the ground, it's not mine. So it's basically the same thing. We have to find a solution that solves both problems at the same time".
I am trying to wrap my head around these rules regarding IRA transactions. I’m certainly not trying to defend Thiel here. Would you mind pointing me to what in my comment lead you to that conclusion?
Also I would be shocked if there aren’t directors at publicly traded companies making under 208,000 and are filing jointly in a single income household.
If you bought the property as part of an incorporated entity, it would be entirely legal for you to do work or be contracted by that entity.