K-1s and UBTI issues
Hello
I’m trying to understand the issues with K-1s and UBTI in taxable and IRA-type accounts. Such issues are pertinent to MLPS and a recent preferred stock KFP issued by KFN, a financial company that operates as a REIT. I will really appreciate any insight into these issues.
Many thanks!
Jeff
Permalink Submitted by Alan - IRA critic on Tue, 2013-02-05 23:29
With respect to IRAs, check your K1 forms for line 20, Code V amounts. If such amounts exceed 1,000 per IRA account, you must forward copies to the IRA custodian for filing Form 990T and the taxes will have to be paid from the IRA funds. You can avoid these issues by making sure that UBTI amounts stay under 1,000 per IRA account, as enforcement is done on a individual IRA account basis. No doubt people are partitioning their IRAs into multiple accounts to avoid this tax and the filing fees. I read about an aggregate limit of 1,500 for all IRA accounts combined, but don’t know if this is correct or not. If it is, the filing requirements need to be updated to reflect reality.