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Author: eddiejack100 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8740  
Subject: Roth and MLPs Date: 1/8/2010 9:51 PM
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I am new to investing,is it a bad Idea to invest in MLPs inside a Roth IRA thanks
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Author: grungeboater Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6057 of 8740
Subject: Re: Roth and MLPs Date: 1/9/2010 6:57 PM
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http://www.irs.gov/publications/p598/ch04.html#en_US_publink...

If you like deciphering irs rules then read this.

In short, MLPs in IRAs.. it is not a very bad practice but it can have bad consequences. To mitigate the tax consequences of Unrelated Business Income Tax in my IRA I tend to keep my MLP investments (in the ira) to a few thousand dollars of each partnership. Thus, I own several MLPs in the ira but have only a 100 to 200 shares of each.

For my taxable account I buy a few select MLPs of several hundred shares each. This way I deal with a few K 1s but the size of the distribution makes it worthwhile.

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Author: stockmover Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6059 of 8740
Subject: Re: Roth and MLPs Date: 1/9/2010 11:15 PM
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Hi gb

To mitigate the tax consequences of Unrelated Business Income Tax in my IRA I tend to keep my MLP investments (in the ira) to a few thousand dollars of each partnership. Thus, I own several MLPs in the ira but have only a 100 to 200 shares of each.

So if I understand this correctly, if you receive less than $1K of UBIT per year from each MLP within your IRA you don't have any UBTI to be reported to the IRS within your IRA correct? ..... even if the cumulative UBTI(s) exceeds $1,000 per year? I am relatively new to MLP's and it's tax consequences within a traditional IRA.
TIA

Rich

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6060 of 8740
Subject: Re: Roth and MLPs Date: 1/10/2010 6:38 PM
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So if I understand this correctly, if you receive less than $1K of UBIT per year from each MLP within your IRA you don't have any UBTI to be reported to the IRS within your IRA correct?

..... even if the cumulative UBTI(s) exceeds $1,000 per year?


No.

The $1000 UBTI limit is cumulative across all MLPs


I am relatively new to MLP's and it's tax consequences within a traditional IRA.
TIA


The National Association of Publicly Traded Partnerships (NAPTP) site is a useful resource for MLP info. Their thoughts on MLPs and Retirement accounts

http://www.naptp.org/PTP101/MLPs_Retirement_Accounts.htm

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Author: stockmover Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6061 of 8740
Subject: Re: Roth and MLPs Date: 1/10/2010 10:49 PM
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Thanks Hh777 for the information and the link to NAPTP. I will use the info to further research MLP's and how best to use them in my portfolio.
Thanks again.

Rich

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Author: grungeboater Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6062 of 8740
Subject: Re: Roth and MLPs Date: 1/20/2010 10:22 AM
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So if I understand this correctly, if you receive less than $1K of UBIT per year from each MLP within your IRA you don't have any UBTI to be reported to the IRS within your IRA correct? ..... even if the cumulative UBTI(s) exceeds $1,000 per year? I am relatively new to MLP's and it's tax consequences within a traditional IRA.

The way I understand Unrelated Business Income there is less probability of incurring $1000+ of Unrelated Income when risk is spread over several partnerships. In any one year there is the possibility of any one MLP can somehow incur an unusually high amount unrelated income. By owning smaller amounts of shares of several partnerships then there is less probability of my IRA incuring the $1000 limit in a single year.

This is how I interpret the rules. It seems that every time I read a professional explaination of this matter the author interprets and explains it differently than the next author. Which is why "talking to your tax advisor" is the most common advice you see when reading about these limited partnerships.

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