Does any one know of any reason that a REIT or Royalty Trust should not be held in an IRA.
I'm looking into the same issues ------ supposedly there are tax issues but I have not gotten the info to review yet. If and when I get the info I'll pass it on - hope you'll do the same. Good luck
Well, I've gotten some information but i cannot say I completely understand the full extent of the tax ramifications ----- royalty trusts are a form of limited partnership. I believe the taxation situation would mirror that for master limited partnerships - where taxable income/loss is distributed and is reported via a K-1 form. Within an IRA, the income earned has to be related to the status of the account ---- so investment income is tax-exempt. However, income generated from the operation of a business can be considered as unrelated to the exempt status of the account. In essence, the income is treated as unrelated business taxable income. Exempt accounts can generate up to $1000. per year in unrelated business taxable income without tax but beyond $1000 the account would be required to pay taxes at corporate rates. you probably want to check this with a tax accountant but I think there may be other investments that may make more sense in an IRA. If your looking for income with a degree of tax-deferral outside of an IRA, this looks intriguing. Good luck
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