Ubti

[taxriv]

On my own rollover IRA, I've discovered that I'm going to have more than 1K in "dividends" from Vanguard Natural Resources. I'm led to understand that this triggers the need to pay Unrelated Business Taxable Income tax even though it's in an IRA. I haven't come up against this before. Is it separate from my 1040 filing? I would think so.

I called VNR Investor Relations and they gave me the runaround telling me that they can't discuss before the K-1's come out in March even though my questions were non-specific. I asked them what happened last year and they blew me away.

Has anyone had to deal with this?

P.S. Vanguard Natural Resources has nothing to do with Vanguard.

[mastertaxguy]

FORM 990-T IS THE REPORTING FORM. TTB Pp. 22-7/8 has guidance, as does IRS Publication 598. You might be able to reduce the UBTI amount by certain deductions directly connected to the UBTI. (See Reg. 1.512(a)-1; CCH MTG Paragraph 682).

I suppose if you paid any resulting tax (which is computed at the corporate or trust rates, not individual rates) from the IRA, such payment might be deemed an early distriubtion subject to the 10% penalty. I am not a registered representative, but hope this investment is in a Roth IRA where the eventual distribution is not subject to ordinary tax when received.