Skip to main content
No. of Recommendations: 2
I'm not a tax accountant, but as I understand it the distributions are, after amortization etc, (which makes a lot, even a the majority in many cases, of the distribution tax-free) considered the same as earnings - like your salary. BIP will send you a K-1 at the end of the year rather than a 1099. The IRS term is "unrelated business taxible income" or UBTI. Morningstar wrote an article that said "...any UBTI distribution that exceeds $1,500 (across all the IRA accounts you hold) is taxable at the account level." and "...you'll pay income tax on distributions that exceed $1,500." Here's another introductory rundown:

http://dividendsvalue.com/6067/increasing-dividend-yield-par...

In addition, the share basis is adjusted down annually by the amount of the distribution.

So I'm trying to keep my distributions below $1,500 and sort of see what the tax season brings before I decide if its worth it. I'd welcome any clarification or correction by those more familiar with the issues.

Ken
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.