ANTHONY DAVIDE
v.
AD CAPITAL COLLECTIONS, LLC, ETC.
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Anthony Davide appeals summary judgments of garnishment against two self-directed IRAs. The court held that Davide's first IRA lost its creditor-protection exemption due to prohibited transactions benefiting disqualified persons (his wife and children) under the Internal Revenue Code, and his second IRA similarly lost exemption because it was funded with money from the first account after it became non-exempt.
The court held that Davide's first IRA lost its exemption from creditor claims under section 222.21(2)(a), Florida Statutes, because prohibited transactions under 26 U.S.C. § 4975(c) caused the account to cease being an individual retirement account. The second IRA also lost exempt status because it was funded with money from the first account after the first account became non-exempt.
[1] A self-directed individual retirement account ceases to be an individual retirement account and loses its exemption from creditor claims when the owner engages in prohibi…
[2] Funds transferred from an individual retirement account that has lost its exempt status to another account will cause the second account to also lose its exempt status.
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Join FLexlaw to unlock all legal intelligence“cease[d] to be an individual retirement account as of the first day of such taxable year”
Establishes that prohibited transactions cause an IRA to lose its status entirely under federal tax law
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Join FLexlaw to unlock all legal intelligenceDavide engaged in prohibited transactions in 2016 involving his first self-directed IRA that benefited disqualified persons—his wife and children. As …
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Third District Court of Appeal State of Florida
Opinion filed May 7, 2025. Not final until disposition of timely filed motion for rehearing.
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Nos. 3D23-0595; 3D23-1463; 3D24-0667 & 3D24-1531 Lower Tribunal No. 12-32510 ________________
Anthony Davide, Appellant,
vs.
AD Capital Collections, LLC, Appellee.
Appeals from the Circuit Court for Miami-Dade County, Carlos Guzman and Mavel Ruiz, Judges.
Moreno Perdomo, PLLC, and Gino Moreno and Arlenys Perdomo, for appellant.
Sequor Law P.A., and Gregory S. Grossman and Jennifer Mosquera, for appellee.
Before LOGUE, C.J., and SCALES and LOBREE, JJ.
LOGUE, C.J.
Therefore, in 2016, due to the “prohibited transactions,” this account lost its exemption from creditor claims afforded by section 222.21(2)(a), Florida Statutes. As to Davide’s second account, the trial court found Davide funded the second account with funds from the first account after the first account lost its exempt status in 2016, and therefore, the second account also lost its exempt status. We have carefully reviewed the arguments raised by Davide and find no error warranting reversal. See In re Moore, 640 B.R. 397, 406 (Bankr. S.D. Ohio 2022) (“IRA owners run afoul of § 4975 when they attempt to circumvent taxes or otherwise engage in some form of self-dealing, whether through a direct or indirect transfer.”).
Affirmed.