@DWP22 wrote:
Thank You macuser_22! As is always the case, one question and answer then leads to additional questions. I may have to seek advice from a Tax Accountant as to my best course of action regarding MLP's in an IRA. There are fees being implemented for the prep of the 990-T Forms from the Custodian and the tax which needs to be analyzed to determine of the investment is worth it. I now want to know if the prepaid tax has any subsequent impact on additional withdrawals from the IRA related to those investments.
Unless this is a special type of self-directed IRA that you are the trustee of then you do not do anything other then give the K-1 to the IRA trustee. As the IRS instructions that I posted say, it is the IRA trustee (i.e the financial institution that holds the IRA) that files the 990-T and pays the tax from the IRA. You cannot do that since the tax paid must be directly from the IRA to the IRS - you cannot do that. Any money that you remove from an IRA is a reportable distribution to you and not a fee that the IRA itself must pay. Only the IRA trustee can pay a fee from the IRA which would be a charge (fee) to the IRA and not a distribution.
**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.**
