I have a client who receives a K-1 (Form 8865). His interest is an investment by his SEP IRA. The K-1 shows an ordinary loss, so no 990T would be required on that. However, there is over $10,000 of capital gain income.

Should a 990T be filed for UBI for the capital gain?

Also, there are distributions showing of over $50,000. The distribution was confirmed that it came to him personally.

Should the distribution be taxable and where and how should it be reported on the SEP owner’s Form 1040?

Look forward to your answer.

Dan