Am I subject to UBIT?
Client has opportunity to buy 1% as a limited partner in purchase of a $17 million apartment in Oklahoma City. About $5 million is needed for the equity downpayment and the general partners would manage the deal in conjunction with local on-site managers. CIient will either regular IRA or SEP-IRA proceeds to buy 1% ownership. The loan underwriting the deal is nonrecourse to client.
Th underlying loan is nonrecourse which shoul allow for investment of retirement funds in deal. However, does client have exposure to UBIT on this deal? Does the fact that client is a limited partner and the property is owned by the general partner’s LLC execpt the UBIT issue?
Permalink Submitted by Alan Spross on Fri, 2011-12-02 22:47
This question is best directed at the self directed IRA custodian the client will have to use if IRA funds are involved. However, my impression is that if the purchase is leveraged, there will probably be UBTI and the IRA would have to file a 990 T and pay the UBIT if the share of UBTI exceeds $1,000. I don’t think the non recourse nature of the loan matters.
Permalink Submitted by Bill Humphrey on Sat, 2011-12-03 17:05
Recourse or not doesn’t impact UBIT, your client’s IRA will have UBIT if it is getting a benefit from the debt. Which it likely is. (hopefully anyway, if the investment goes well).
The investor is the IRA, not the individual. Non-recourse to the individual does allow the IRA to make the investment but the tax will be calculated based on the results of the investment and the leveraged portion. You should make sure that the partnership is able to provide the UBI taxable portion of the income via the K-1 or as supplemental info. Many times company’s seeking IRA investors don’t realize that there is a little extra work involved. It isn’t difficult but it is easier if they collect the info as they go.
Note also, that even though the IRA may not have a tax, filing the 990-T anyway can produce loss carry-forwards to offset future taxable income.
Permalink Submitted by Jim Clabaugh on Mon, 2011-12-05 17:48
1. If the person uses IRA money to invest in the FOREX which is leveraged, is a UBIT owed on the profits? If yes, when is it owed and how much?
2. If the person uses IRA money to invest in a company that trades the FOREX, is a UBIT owed on the profits returned from the company to the IRA? If yes, how do I find more information on this?
thanks.
Permalink Submitted by riiupw afrass on Fri, 2021-01-22 16:42
And what is your opinion about online trading? I find it one of the most promising methods of making money online. I like to trade CFDs. This type of trading does not require burdening investments and allow you to earn something. You can trade with any broker. I prefer markets com review http://tradersunion.com/brokers/forex/view/markets.com/ . It offers very good terms for beginners.
Permalink Submitted by Alan - IRA critic on Fri, 2021-01-22 17:26
Yes, the UBTI threshold for an IRA is still 1,000.
Permalink Submitted by Garl zarl on Sat, 2021-11-20 04:10
Forex market is completely decentralized. In basic words, no such actual area exists where financial backers go to exchange monetary forms. Forex merchants utilize the web to see the statements of various cash sets from various vendors. Monetary revolves all throughout the planet – London, New York, Tokyo, Hong Kong and Singapore – work as anchors of exchanging Best Forex Signals between a wide scope of various sorts of purchasers and venders. To gain admittance to interbank cash market, you should way to deal with Forex specialist.