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Taxes on MLP's in Iras's

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!!!

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2 Best answer

Accepted Solutions
TomD8
Level 15

Taxes on MLP's in Iras's

"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.

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

View solution in original post

Taxes on MLP's in Iras's

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. 

View solution in original post

4 Replies
TomD8
Level 15

Taxes on MLP's in Iras's

"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.

 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Taxes on MLP's in Iras's

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. 

Taxes on MLP's in Iras's

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
Level 15

Taxes on MLP's in Iras's

"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. 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.
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