Taxes on MLP's in Iras's

[Araewood]

My investment firm is paying the IRS the tax amount due from my IRA  because there was over $1,000 of UBTI from an MLP that I own. They sent me a copy of the 990-T and will take the money from my IRA account. Is there state tax due on this income? They don't mention anything about taxes due in the state of CA, where I live. Do I have to redo my taxes from 2021 if they are paying the additional amount due?

Thank you to the CPA who knows about MLP'S!!!

[TomD8 · Accepted solution]

"Do I have to redo my taxes from 2021 if they are paying the additional amount due?

No.  An IRA is an exempt entity separate from the beneficial owner of the IRA and can be subject to taxation on its own.   The responsibility for paying those taxes rests with the IRA custodian.

[Critter-3 · Accepted solution]

Agreed ... the 990 form was filled in , filed and paid by the IRA custodian and a copy was sent to you for your information only and is not put anywhere on a personal income tax return so there is nothing to fix or amend. 

[Araewood]

That is a great relief my federal taxes are done. To verify, for the state of CA, I don't have to worry about any taxes that are due? 

Thanks again, the MLP's are confusing and I will sell it soon!

[TomD8]

"To verify, for the state of CA, I don't have to worry about any taxes that are due?"

Talk to your IRA custodian.  They will verify the UBTI rules for you.