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Linn Energy, LLC Message Board

  • ronharv ronharv Mar 11, 2013 11:16 AM Flag

    For sec_bubba re 990-T Part II

    The signature is the broker’s, NOT yours. Make sure you speak to the broker’s employee who handles this 990-T so he/she knows to forward your explanation and relevant prior years’ K-1s and 990-Ts to the IRS. (Attach a cover note with directions so you don’t get forgotten in a potential host of 990-ts being sent to the IRS.) If you keep an MLP in an IRA for a number of years, the 990-T packet will grow a bit larger with each annual submission. (I provide the packet, as I can’t imagine a broker going to the trouble when hardly anyone uses this carryforward procedure . . . . One of the IRS specialists said that by providing a complete history for reference - prior K-1s & 990-Ts - the less likely I am to be questioned. And she emphasized the short explanatory sheet. (I cite a brief summary of prior years’ carryforwards and conclude with the current carryforward.) I got the strong impression from both IRS folks that MLPs for individual IRA owners were not exactly a focus of attention in light of the 990-T being an all-purpose form for charities, churches, colleges and universities, political organizations, and umpteen other non-taxable organizations. Comparatively, MLPs in IRAs are small potatoes.

    I suggest copying these two e-mails for future reference.


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    • From abter1 on the IV board (I posted a simialr question there):

      Positive UBTI does not accumulate. There is tax forgiveness on the first $1,000 of UBTI in that year. In your first example you have faced tax on your positive UBTI, but didn't pay tax this year because of the $1,000 forgiveness.

      For the purpose of summing UBTI for this year's tax purposes, only the positive UBTI's matter. This year's negative UBTI's are treated as if they were zero. So in your example, you have $1,600 in cumulative (positive) UBTI. The first $1,000 gets the tax foregiveness, so you face tax on $600. If you have previously carried forward negative UBTI in any of the 3 MLPs with positive UBTI this year, you can use the carried forward negative UBTI to offset this year's positive UBTI from the same MLP. It could work out that the carried forward negative UBTI's could reduce the cumulative total for this year to

    • One last dumb question ... do I file or just hold these until I exceed $1000 ... was not totally clear to me in explanations.

    • Thx many times .... I presume I have 4 months after 4/15/2013 to file?

      • 1 Reply to sec_bubba
      • I replied to this yesterday, Bubba, but it disappeared. For TD Ameritrade the 990-T paperwork has to be in by April 4. Keep in mind that the broker is responsible for signing off and submitting the 990-T to the IRS. Make sure they'll be sending your short explanation along with it. If the 990-T is filed late there'll be a penalty fee. I'd try to avoid it.

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