David Posted May 7, 2015 Report Share Posted May 7, 2015 Client has 2 K-1s for PTPs included in his IRA. These are final K-1s.The K-1s report ordinary business income (loss) in box 1, interest income, dividends, royalties, 1231 losses, and minor amounts of UBTI in box 20 code V ( the net of the 2 K-1s is a loss).The instructions indicate that since this is a final K-1 and the partnership interest has been terminated, then a gain or loss from the sale of the interest needs to be reported.The K-1s don't need to be reported since they are related to an IRA account, do they? I don't want the client to get a letter from the IRS regarding unreported K-1 information.Thanks. Quote Link to comment Share on other sites More sharing options...
Ringers Posted May 7, 2015 Report Share Posted May 7, 2015 David, Since the K-1's are within an IRA, no reporting is required. I get a lot of these each year. 1 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted May 7, 2015 Report Share Posted May 7, 2015 No reporting on the individual's 1040. But, depending on the levels of UBTI on all the K-1's owned by an IRA, there may need to be reporting by the IRA. Tell your client to take them to his plan administrator to combine with the other IRA investments. 3 Quote Link to comment Share on other sites More sharing options...
Catherine Posted May 7, 2015 Report Share Posted May 7, 2015 The first time I ever saw these it confused the dickens out of me, too. But in and IRA = not reportable by the IRA holder. The plan... well, that's their lookout. Quote Link to comment Share on other sites More sharing options...
David Posted May 7, 2015 Author Report Share Posted May 7, 2015 Thanks all for your help with this. Quote Link to comment Share on other sites More sharing options...
Richcpaman Posted May 8, 2015 Report Share Posted May 8, 2015 The UBTI has to be greater than $1,000 for your clients IRA in order to file the return that would tax it.Kinda tough to get over that limit, unless your client bought ALOT of them. Rich 2 Quote Link to comment Share on other sites More sharing options...
taxxcpa Posted May 8, 2015 Report Share Posted May 8, 2015 The UBTI is code v on the K-1. If it is over $1000, it is taxable . However I doubt that IRS adds them up to check Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted May 8, 2015 Report Share Posted May 8, 2015 Has anyone ever seen one of these PTPs that really made money? Because I sure haven't. I think they're so complicated that most people can't tell if they're making money or not. Plus our fees are much higher when clients have these investments. 1 Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted May 8, 2015 Report Share Posted May 8, 2015 Actually, I have a client that had one that was a registered tax shelter with low income housing credit . They saved a bundle in taxes over the years, and I think now they are actually getting a small amount of income from it. That is the only one I have ever seen that I thought was worth the trouble, and I think that the same situation now would not lead to the same results due to the changes in the tax laws. But it has given me a lot of respect for the investment adviser that client uses. 2 Quote Link to comment Share on other sites More sharing options...
RitaB Posted May 8, 2015 Report Share Posted May 8, 2015 (edited) I second what everybody is saying, plus I will add that the recipient ID number on all the ones I see are not my clients' SSNs. That always makes them feel better when I'm telling them, "No, I don't need to amend your return since you got this two days after filing..." (Every. Time. Grrrr.) Edited May 8, 2015 by RitaB 2 Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted May 8, 2015 Report Share Posted May 8, 2015 It does sometimes seem like brokerages and PTP's have a spy at the IRS that tells them as soon as the return has been filed and accepted so they can then send either this unexpected K1 or a corrected 1099. Must be some kind of joke that I don't understand. I ain't laughing. 5 Quote Link to comment Share on other sites More sharing options...
taxxcpa Posted May 8, 2015 Report Share Posted May 8, 2015 KKR sends its K-1 about April 30. I sold it in the margin account and bought it in the IRA account to avoid this in the future. 2 Quote Link to comment Share on other sites More sharing options...
Richcpaman Posted May 9, 2015 Report Share Posted May 9, 2015 I have many clients tell me how they are making money from them, because of the monthly/quarterly distributions. Then I show them that it isn't coming from INCOME, but from PRINCIPAL. Usually 50-60% from Principal. And I ask them who are they selling these assets to when they want to get out? That always makes for a great Client "face".And did we notice how many clients have these K-1's THIS year? Because the sharp guys on Wall Street were dumping them. Oil market/prices are going down, so sell these assets that were going up, that are starting to go DOWN, to *our* clients. Thanks big brokerage firms.... You just stuffed the investment dreams of your clients. Rich 4 Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted May 12, 2015 Report Share Posted May 12, 2015 I second what everybody is saying, plus I will add that the recipient ID number on all the ones I see are not my clients' SSNs. That always makes them feel better when I'm telling them, "No, I don't need to amend your return since you got this two days after filing..." (Every. Time. Grrrr.)Just be glad they bring them to you, Rita, because the time they don't will almost always be one of the few times they really should have! 1 Quote Link to comment Share on other sites More sharing options...
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