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San Juan Basin Royalty Trust Message Board

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  • geo12ar geo12ar Aug 9, 2005 11:14 AM Flag

    SJT - all time high

    I came to exactly the opposite conclusion and have shifted as much as possible out of IRA's into personal accounts. I'd be interested in your reasoning but here's mine. With SJT all of the income is essentially already sheltered by the depletion for a considerable time period. Yes that is recaptured if you sell. On the other hand if you own it in an IRA when you inevitably distribute the proceeds to your self it will all get taxes at the highest possible rate(even the cap gains portion which if held outside an IRA would be taxed at approx 1/2 that rate). With Canroys in an IRA you lose all of the 15% withholding(as opposed to approximately half in a personal account). In addition, some of the Canroys shelter a portion of the distribution as ROC(admittedly generally a minority of the yield).
    I try to limit my IRA investments to taxable debt and other non qualifying income distributions and positions that I believe I am likely to liquidate within a year.
    I'd be interested in your thought process.

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    • "On the other hand if you own it in an IRA when you inevitably distribute the proceeds to your self it will all get taxes at the highest possible rate(even the cap gains portion which if held outside an IRA would be taxed at approx 1/2 that rate)."

      1) The highest possible rate would be your ordinary income tax rate for the year of distribution. Could be 0.

      2) My shares are in a Roth IRA, as to which there are no taxes at all upon distribution (provided you meet the normal distribution requirements.)

      That's my understanding, anyway, but I am neither an accountant nor an expert (and hope someone will correct any errors.)

      And for that reason am glad not to be worrying about depletion, expiration of step-up in basis rule, etc. etc.

      Regards

 
SJT
17.3416-0.2484(-1.41%)3:13 PMEDT

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