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New Member
posted Jun 1, 2019 1:01:55 AM

Does schedule k-1 income held in an IRA need to be shown in tax filing?

I have already filed for 2016 before i received the K-1

0 8 28114
8 Replies
Expert Alumni
Jun 1, 2019 1:01:57 AM

Probably not; however, if your IRA earns more than $1,000 in unrelated business income as reported on the K-1s you received, the IRA must pay unrelated business income tax -- UBIT -- on the amount above the $1,000 cutoff. Not all of the distributions you receive from MLP investments will be UBI, and many partnership investments will report little or no UBI on the K-1s they send out. If the K-1s you received total to less than $1,000 in UBI, there is nothing you need to do. With more than $1,000 in UBI you need to contact your IRA custodian.

Tax rules require tax-advantaged accounts like IRAs to pay income tax on what is called "unrelated business income." An IRA holds investments and partnership income may not be investment income, resulting in UBI from your partnership investments. The amount of unrelated business income from your IRA's partnership investments will be listed as such in Box 20 of the K-1 form. Only the amounts of unrelated business income are important concerning taxes and your IRA account.

Not all of the distributions you receive from MLP investments will be UBI, and many partnership investments will report little or no UBI on the K-1s they send out. If the K-1s you received total to less than $1,000 in UBI, there is nothing you need to do. With more than $1,000 in UBI you need to contact your IRA custodian.

For more information see http://finance.zacks.com/report-k1-ira-account-7692.html





New Member
Jun 1, 2019 1:01:58 AM

Is this $1,000 cutoff for a specific tax year, or cumulative over the life of an IRA? Appreciate the advice

Level 15
Jun 1, 2019 1:02:00 AM

Per year.

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>

New Member
Jun 1, 2019 1:02:02 AM

What if the codes in box 20 are A and AC? And do I still need to submit the K-1 to my IRA Custodian? Box E is NOT my SSN.

New Member
Jun 1, 2019 1:02:02 AM

What if box 20 has code A and AC? Also box E is NOT my SSN.

Level 15
Jun 1, 2019 1:02:05 AM

No.  Those are not unrelated business income.

New Member
Jun 1, 2019 1:02:06 AM

Thanks, So I don't have to submit to my IRA custodian either?

Level 15
Jun 1, 2019 1:02:08 AM

Correct.