K-1 for PowerShares DBC Held in an IRA

I received a K-1 (Form 1065) from PowerShares DB Commodity Tracking Fund (DBC) for shares that are held in an IRA. Apparently, DBC is a partnership, and my IRA is a limited partner. On line F, the K-1 states that the partner is a ROLLOVER IRA, and on line I it says that the entity is an IRA/SEP/KEOGH, so they know that the account is an IRA.

Included with the K-1 is a summary of how to report the information on my tax return. E.g.,

Line 5: Interest Income. $29. Report on Form 1040, Line 8a.

Line 8: Net Short-Term Capital Gain (Loss). $23. Report on Form 1040, Schedule D, Line 5.

Etc. I'm confused by these instructions. I thought that what goes on inside of an IRA is of no concern to the IRS; only what goes in and out. Is that right? Can I just ignore the K-1 as far as filing my income taxes is concerned?

Dave

Reply to
Dave
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DBC is organized as a publicly traded partnership. As at least 90% of its income is "qualifying income", it meets the exception to avoid taxation as a corporation. As such, anyone who owns shares is a ltd partner and receives a K-1. In your instance, the owner is an IRA and therefore can disregard any dividends, interest or capital gains.

Reply to
Alan

Obviously, in this case there won't be an issue as the reported income is well under $1,000, but how can you tell that the income is not UBTI?

Reply to
Ron Rosenfeld

under $1,000, but how can you tell that the income is not UBTI?

See line 20-V of the K-1.

20V = Unrelated business taxable income
Reply to
removeps-groups

under $1,000, but how can you tell that the income is not UBTI?

The structure of the fund is that it would never have unrelated business income.

Reply to
Alan

Thank you. I have had IRA holdings with UBTI, but never enough to be taxable. I couldn't recall the nature of the K1.

Reply to
Ron Rosenfeld

Thanks

Reply to
Ron Rosenfeld

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