You do not have to report any activity "inside IRA", whether it is K-1, interest, stocks, or any type of trading.
All investment activity that occurs within your IRA is treated the same, regardless of the form it takes. Dividends, interest and capital gains are all allowed to grow without creating a current tax obligation or additional reporting.
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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.
<a rel="nofollow" target="_blank" href="http://www.irs.gov/publications/p598/ch01.html">http://www.irs.gov/publications/p598/ch01.html</a>
Most custodians will send a letter to IRA holders that have such investments informing then what to do of they receive such a K-1 (I know Schwab does since I receive the letter every year).
Unless there is more than $1,000 of unrelated business income total from all such K-1's, you can ignore it/them).
I'm not certain that is completely true. The custodian of the qualified account will indeed file a 990-T form on your behalf and pay taxes against all monies in excess of $1000, when its deemed UBTI, will it not? Therefore it will grow, but also create a current tax obligation. It just happens to be outside of your personal tax filing.
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