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whence positive UBTI (IRA issues)
Old 03-04-2017, 03:00 PM   #1
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whence positive UBTI (IRA issues)

Common advice is to keep partnership-type investments out of IRAs for fear of Unrelated Business Taxable Income that can trigger taxes due from an IRA. Now that 2016 partnership K-1 forms are arriving, I'm reminded I've never seen one that generates positive UBTI (code V in box 20). The few investments of this type I have are energy related, and they routinely show a negative UBTI.

Is there a type of partnership that often generates positive UBTI? If I acquire one of those, can I offset it (for tax purposes) via the negative UBTI of others?

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Old 03-05-2017, 12:51 AM   #2
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I don't have any direct experience with this. Only had positive UBTI ages ago in some oil drilling LPs but never enough to report. Was surprised to hear of the existence of negative values. FWIW.........a google search found this from TT..........if true sounds like you can't offset except against the same entity

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Old 03-05-2017, 03:40 AM   #3
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I hope your IRA is in one account. Filing for UBTI for in IRAs is for UBTI of $1k or more. This is the total for your IRAs even if held in multiple accounts or brokerages. Many (if not all) custodians will file the taxes for the IRA. If split between brokerages, they would not have enough info to know to file.

I had some commodity ETFs that kicked out K-1s and had some positive UBTI.

I'm not investing in partnerships at this time and never significantly enough to generate that type of UBTI. So I don't know the details.
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Old 03-05-2017, 02:31 PM   #4
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I have been researching this to specifically purchase a K-1 investment. I already bought 500 and total income generated from this preferred stock unit that will issue a K-1 is just under $1000. So no chance of a triggering. But I do not know what if any UBTI this will generate. I am getting conflicting info on whether the $1k UTBI is per account of or cumulative. I have also read $1500 across all accounts. But I do know this. The 990 T is filed under employer ID number to retirement account, not by social security number. So the cross referencing of accounts across brokerages would not happen. I am investigating more, but I may push the envelope a bit and buy a bit more in a separate brokerage account. And it may be a moot point as the company may not even generate enough UBTI to matter, or for the amount I am buying anyways. Im not worried about avoiding taxes, I am worried about nightmare paperwork I dont understand.
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