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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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If I buy the stock KMR, will I be able to put it in my Roth

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If I buy the stock KMR, will I be able to put it in my Roth IRA and avoid UBTI?

MyVirtualCPA :

Thank you for your question, and thanks for using JustAnswer.com. As far as MLPs go, KMR is designed to be held in tax deferred accounts such as a Roth IRA

MyVirtualCPA :

Their counterpart, KMP, is designed more to be held in a taxable account - which would be beneficial because the payouts from KMP can be classified as a return on capital. There's no benefit to holding this in an IRA.

MyVirtualCPA :

But, KMR is designed with tax deferred accounts in mind. Many people hold this MLP in their IRA portfolio.

MyVirtualCPA :

KMR does not generate UBTI, because their distributions are made for additional units, not cash so you are receiving more stock instead of a cash benefit

MyVirtualCPA :

For this reason, there is no UBTI and it should be safe in your Roth IRA account.

MyVirtualCPA :

Is there anything else that I can assist you with today? If not, please rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

I knew this already. But apparently some investors may get hit. What do you need to know to find out if I personally will or won't get hit?

MyVirtualCPA :

Thank you for your follow up. If you take your distributions in additional shares, you will not be hit by UBTI. From what I read, you will not be hit with UBTI with KMR, but you could be with KMP.

MyVirtualCPA :

Is there anything else I can assist you with today?

Megan C and other Finance Specialists are ready to help you
I just wanted to say thank you for the positive rating and if you ever need another question answered please ask for MyVirtualCPA. In addition too answering all your tax questions I also can address any Social Security of Finance questions that you may need answered.

Thanks again and have a great night.