"When an IRA invests in a partnership or LLC, the IRA owner will receive a Schedule K-1 that they must report on their tax return."
This is completely wrong. Nothing about the activities within the IRA are ever reportable on an individual's tax return.
If the Schedule K-1 (Form 1065) reports an amount with code V in box 20, the IRA might have to file a tax return (Form 990-T) and pay Unrelated Business Income Tax. The payment of this tax by the IRA reduces the value of the IRA.
