MLP in an IRA
What are the tax advantages/disadvantages of owning a MLP in an IRA? Client has a gain of $15,000. If he sells, would the gain be taxable?
What are the tax advantages/disadvantages of owning a MLP in an IRA? Client has a gain of $15,000. If he sells, would the gain be taxable?
Permalink Submitted by Alan - IRA critic on Sat, 2013-06-01 04:46
There are no current tax implications of holding an MLP in an IRA. Sale of the MLP is tax deferred as is sale of any assets in the IRA. Taxes only occur when there is a distribution from the IRA. The exception is the tax on unrelated business income which might be generated by the MLP. If such income exceeds 1,000 in the IRA account, the IRA must file Form 990 T and the IRA must pay the tax on the UBIT at the much higher trust tax rates. Taxpayer would find out about the UBIT when receiving a K 1 from the MLP.