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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Recently, I read that MLPs are not suitable for individual

Resolved Question:

Recently, I read that MLP's are not suitable for individual IRA or other tax-deferred accounts because they generate a type of income called "unrelated business taxable income" (UBTI). Can someone explain the tax consequences of MLP's in an individual IRA account?
Submitted: 6 years ago.
Category: Tax
Expert:  MequonCPA replied 6 years ago.



Even though the income earned within an IRA is not taxable until withdrawn, there is an exception for UBTI. This income is taxable within the IRA. Thus the IRA will be required to file a form to report its UBTI and pay the appropriate tax. Where there is only nominal UBTI (under $1,000) no filing is required.


I have provided a link to an article from The Motley Fool that fully explains UBTI:


MequonCPA and other Tax Specialists are ready to help you
Customer: replied 6 years ago.

Thank you for the prompt reply. The information and link to the Motley Fool article that you provided helped clarify this issue for me. I will "accept your answer" to proceed with payment, but I must say I was deceived by the JustAsk site which implied that the help being offered was free. The user does not know that he/she will be charged for the advice until the question is submitted. I find this business model troublesome.


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