sfbusfbu.Thanks I'm going to get a ruling on this when I next meet with my CPA. Explain
UBTI . I did hear a rumble about a $1000 threshold. My CPA was an agent for the IRS.
and she's pretty savy. stuce
Be careful with the "woodstove" treatment. If your UBTI is = $1000, then your IRA owes taxes. Schwab (and others most likely) will handle this for you if you send them your K-1.
HoHoterry, I reading I saw a note that if LP's dividend was over $1000 it could trigger an audit.I guess I'll keep bouncing the question off my CPA's knoggin. The article didn't go
into any details,the subject was "what triggers an IRS audit. stuce
They're only unsuitable if you have large MLP positions. There are complicated tax matters that puts parts of your return of capital into different buckets- a small percentage is taxable only if it is over $1K I think it is. If you are getting less than $10-20K per year in MLP distributions, I think you can safely throw them in the stove. I sincerely doubt the I-R-S has it together enough to even know who owes and who doesn't. If you get audited, they may put you through an exercise, but in the end, you will likely not owe anything more or a negligible amount. I'm clearly not an accountant but looked into this years back- I don't remember all the particulars-- just a rule of thumb. If you're taking down $30-$50K+ annually in MLP distributions to your IRA, I would definitely talk to an accountant.
I find this thread interesting in that, even my accountant doesn't know that there are no tax consequences from holding mlp's in an ira unless one has more than a thousand dollars in ebitda (sp?).
My online broker sends me the k-1's and I pass them on to my accountant which increases my accounting bill.
From now on they go in the round file.
In fact my next evolutionary phase is to learn how to use turbo tax.
It's really not just like any other stock -- it's a partnership, not a C-corporation.
I don't see how dividends from a MLP inside an IRA can be treated differently from dividends from other stocks
Because they're *not* dividends -- they're cash distributions, whose tax characteristics are described by the K-1.
I wonder why someone would tell you MLP are not suitable for an IRA
Because if your share of the partnership generates more than $1000 in UBTI -- Unrelated Business Taxable Income -- your IRA needs to file a special tax return and pay tax on that. That's one of the differences between dividends from a corporation and distributions from a partnership. That number is reported to you on your K-1. There are other potential complications as well. The basic strategy of "let's ignore it and see if we get audited" works well until it doesn't.
I also have several MLPs in my IRAs, and I get these K-1s. My IRA is with Schwab, and they are supposed to file these K-1s, so I send all my IRA K-1s to them and they send them to Uncle Sam.
There's really only one thing on those K-1s the govt. is interested in; Line 20, Code V -- Unrelated Business Income. Don't hold me to this, but I think it will probably NEVER make a difference on your taxes -- unless you are a major holder of the partnership. There's often a loss on this item, which is good, because it will offset gains in future years......
Hohoterry, I've had a few MLP's in IRA's ,and just toss the K-1's in the woodstove. I was told at the time
I bought APU it was great for an IRA,but not to exceed say,15% of total. So maybe if the IRA was heavily
weighted with MLP's then the taxman would surface? Added KMP to the IRA recently.I think the Government
gave away the farm with the Roth IRA,we haven't touched ours,and hope we don't have to,just let'em grow.stuce
I wonder why someone would tell you MLP are not suitable for an IRA, it's just like any other stock as long as you know when it runs out. It is like anything else, you have to check in on them from time to time. Buy and hold is great, just don't buy and forget IMHO
I have had TCP at different times in my IRA, it is MLP, nice divi, I took the K form to my accountant, he said you don't need that it isn't taxable ..So, you are right, it doesn't get taxed, at least at this point in time