Section 4975 (a) imposes a 15% special tax (the first-level special tax) a. In addition, § 4975 (b) imposes a 100% special tax (the. Second level (special tax) on a prohibited transaction, if that prohibited transaction is. It was not corrected during the taxable period.
A tax is hereby applied to every prohibited transaction. The tax rate will be equal to 15 percent of the amount involved with respect to the prohibited transaction for each year (or part of it) of the taxable period. The tax imposed in this subsection will be paid by any disqualified person participating in the prohibited transaction (except a trustee acting solely as such). Specifically, Section 4975 of the IRC stipulates that the owner of an IRA (and any other person responsible for the IRA account) is prohibited from combining the financial interests of the IRA itself with those of its owner or any other related party, all of whom are considered “disqualified persons.” Some of the most important requirements are found in section 4975 of the Internal Revenue Code, which states that the IRA will lose its tax-exempt status if it makes prohibited transactions between the IRA and certain disqualified individuals.