Private real estate fund held in self directed IRA

[jbertolini]

I live in NJ and hold shares of a private real estate fund in my self directed IRA.  I received a K-1 from the fund which shows taxable business income from PA.  Since this is in an IRA and the income is not taxable, I am hoping I do not have to file a PA state return.  Is this correct?  I do not have any other PA income.  thanks.

[macuser_22]

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,

[jbertolini]

macuser_22 thanks for your prompt and comprehensive reply.  There is no income in box 20, all the income is in box 1 ordinary business income(loss). So then there is no requirement for form 990-T? I can check with the IRA custodian on that as well.  More importantly for the moment, I  dont need to worry about filing a PA state return?