Schedule K-1 for IRA holding?

Grrrr. I always yell at brokers who do that.

It belongs to the IRA, and has absolutely nothing to do with your tax return. If the IRA has enough UBTI (Box 20, Code V), your IRA might have to file a tax return, and pay tax. If you didn't know that already, your IRA has no business owning PTPs.

Phoebe :)

Anything held within an IRA is deemed to be owned by a separate entity, and not subject to taxes until distributions are taken. So long as the ownership is properly titled, i.e., "XYZ, TTEE FBO IRA of N_B" (or something to that effect) ... there should never be a question. Bill

Although I am not familiar with that particular entity, I think the answer is who is the shareholder/investor in it. Whose name is on the K1 should help to determine if it is taxable to you or not. You may want to consult with your CPA/tax advisor.

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-----> real address on hobokeni or hobokenx

Can an IRA have UBTI? An IRA's exempt purpose is to invest and to grow. What could be unrelated to that and still generate income? Stu

I would like to hear your reasoning. Most PTPs seem to have negative UTBI. But if I am making a dumb mistake, I can't blame the broker. I do fear that at some time I will get hit with the UBTI ~30% tax plus probably a fee for filing the tax. I think I understand that aspect to a point. If I could keep the UTBI under $1000 in a year, then no problem. What I am ignorant of is, suppose I reach a point where depletion does not offset any more, the basis has dropped to zero, and I then sell the PTP that is in the IRA, am I going to have a big tax event where the depletion is suddenly recaptured as UBTI?

Sorry, I thought you said URBI.

Stu

Thanks to all :) My K-1 form shows my name/address for Part II-H "Partner's name", but for the "Partner's Identifying Number" in Part II

- G is not my SS/TaxId it is the TaxId for my IRA account broker, e.g. charles schwab. Also there's no UBTI income shown in Part III-20 and the other amounts in Part III are all small (< $100). So based on your responses I can ignore the IRA K-1 on my return. I know several other friends/colleagues also owned USO (a hot stock last year) in there non-IRA accounts. Many of them already filed their 2006 returns and were surprised to receive a 2006 K-1 from USO this week. An important lesson is don't buy an exchange traded fund unless you verify that it is not a "partnership".

Yep.

IRA's most certainly can have UBTI. See, for instance, the instructions for Form 990-T. Ira Smilovitz

I understand that the IRS takes that position. What I don't understand is the legal basis. How could any investment be unrelated to its exempt purpose when it's purpose is to make investments? Stu