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Energy Transfer Partners, L.P. Message Board

  • orlanto_bloom orlanto_bloom Jan 25, 2012 3:07 AM Flag

    UBIT

    Is the Unrelated Business Income Tax allowance of $1000 p.a. for each IRA or for each tax payer?

    i.e. If I have a Roth and a regular IRA, can I have income up to a $1000 in each from MLP's without a problem?

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    • Think you need to move on. The problem if you get into the tax is there is a $1000 threshold according to the IRS then a 15% rate that rapidly goes to 35%. If your investment is not in an IRA then UBTI does not exist. I also note I have only had UBTI generated in almost 20 years by two companies - MMP and PAA - on a consistent basis. APL had one year with big UBTI.

      YOU as the holder of the IRA are responsible for getting the info to your broker and they can and do charge your account for filing.

      Whoever said that if you are getting a great return, who cares is correct. The problem is UBTI varies from company to company and from year to year. In fact it varies from holder to holder depending on when you bought in. Completely unpredicatable.

      ARB

    • Orlanto, even if you go over the $1000 you just pay tax on the amount over correct? So let's say your UBIT total is like $1200 for one tax year. You would pay your current rate on $200 correct? I do not see that being a big deal for the potential of having 6-7.5% on MLPs in this interest enviroment.

    • To write an article for Seeking Alpha requires a computer and the author gets about $65. They need to have no experience or credentials of any kind. I would want to have a real source provide that information instead of a person writing an article.

      ARB

    • If you hold you MLPs in multiple accounts the MLP will issue ONE 1099 for every SS#. Multiple accounts does not avoid the tax.

      Also YOU need to tell the custodian. The custodian then needs to file the return (charging your IRA).

      The big question is unless you have all your investable $$ inside an IRA, why put tax sheltered income inside a tax shelter? The capital gain portion of your sale is treated as ordinary income in an IRA instead of LTCG. Bad deal.

    • I have read the argument on both sides. I don't think anyone has a definitive answer.

      Personally I hold all my MLPs in the taxable account so I don't follow the UBTI question as closely as others.

 
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