No, your IRA, not you, is paying UBIT on the UBTI. Yes, when the funds in your IRA are distributed to you, they will be taxable income to you, a separate taxable transaction. There is nothing you can do to offset the UBIT paid, it's the cost of having your IRA invested in investments that are subject to UBIT. The UBIT paid simply represents the equivalent of an investment loss that reduces the gain in your IRA value that resulted from the UBTI.
