@DWP22 wrote:
I have a couple of investments in MLP's in my IRA. Last year I received a completed form 990-T after I filed my returns. My research leads me to the unfortunate conclusion that indeed the income over $1000 received from an investment in an MLP residing in an IRA is Federally Taxable in the year in which you receive it. Is there a provision in Turbo Tax to address this and include this in the tax calculations? I cannot find anything mention or even the acknowledgement of the form 990-T. Any help would be appreciated.
No, And any tax can only be paid *by* the IRA - not you.
Unrelated business income is reported on a 990-T form.
If you hold a Limited Partnership or LLC in your IRA then any Unrelated Business Income in excess of $1,000 is taxable (even though it is in an IRA). It is not reported on your tax return but on a 990-T form. (The custodian of your IRA is required to file the form for you but you must submit the K-1 form(s) to them - ask the custodian about this).
Unrelated Business Income is reported as code "V" in box 20 on the K-1 form.
Also see pub 598.
http://www.irs.gov/publications/p598/ch01.html
Per the 990-T Instructions: https://www.irs.gov/pub/irs-pdf/i990t.pdf
"Who Must File
Trustees for the following trusts that
have $1,000 or more of unrelated trade or
business gross income:
1. Individual retirement accounts
(IRAs), including traditional IRAs"
4. Roth IRAs described under section
408A,
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
