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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120801  
Subject: Re: Royalty Trust Income Date: 3/8/2009 9:11 AM
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I am considering buying some stock which reguarly distributes royalty income. I have read some horror stories on the Fool msg boards how this income is reported on Sch E and that some stocks are notorious for sending out "corrected" 1099's very late during the filing season and of course required that an ammended return be filed for those folks who already filed their return.
I was wondering if I can avoid all these problems by purchasing these stocks within my traditional IRA to avoid these problems? Logic tells me yes, but as Phil often says ...the IRS is NOT always logical regarding their regulations.
Will this work for me? Any advice would be appreciated.


This potentially could be an even worse nightmare within an IRA account. If the investment reports its income and distributions to you via a Schedule K-1 and not a 1099-series form, you have to worry about Unrelated Business Income (UBI). If your IRA receives more than $1000 in UBI in any tax year, it must file its own tax return and pay income tax.

Ira
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