Unrelated Business Income Tax may apply to certain entity investments when IRAs or other tax-exempt structures are involved. As discussed on When Does UBIT Occur, if you have invested your IRA into one of these entities, there are important considerations regarding UBIT that you need to take into account.
IRA Investors Investing in Entities:
As an investor, you know the importance of performing your own due diligence. That is why, if you’ve invested your valuable IRA funds into an entity such as a LP, LLC, hedge fund, etc., it is critical that you are sure that your fund manager is considering UBIT.
If you ask your fund manager how they account and file for UBIT and they do not have a good answer, it would be prudent to direct them to UBIT Professional. Many fund managers may not be aware that if they have IRAs invested in their fund UBIT will likely apply and may be required to be filed annually. You don’t want to put the tax-exempt status of your IRA at risk because UBIT was not addressed by your fund manager.
You may also be required to file a Form for any year that your IRA invests in an entity. If your fund manager does not file this for you then it falls on your plate. UBIT Professional works with fund managers and individual investors like you to handle Form 990-T preparation and to ensure you are compliant with the Internal Revenue Code as it relates to UBIT. Contact us today for a free consultation to ensure that your IRA is compliant with the IRS.
IRA LLC Owners:
If you are an investor who has set up an LLC, you likely understand the complexity of the Internal Revenue Code and the importance of a detail-oriented approach. The structure itself requires an expertise that is beyond the average IRA investor.
If you set up your LLC yourself, or if you enlisted the help of a qualified professional, it is important to revisit this topic to make sure you are taking UBIT into account. Since your IRA invests in the LLC, the income derived from the LLC will likely be considered unrelated business taxable income, and UBIT would apply.
Allow UBIT Professional to remove the complexity of your UBIT preparation by contacting us today. We will help review your situation with you and your financial team and can handle the preparation for you so you can remain focused on the income-generating activities that your LLC participates in.