Final K1 Form 1065 - Issued for a client's investment in a Roth Account

[eggmop]

The K1 is isssued by Linn Energy LLC with my clients SSN - The type of entity on Line I1 is Roth IRA and I2 is checked that the partner is a retirement plan. Should I report this on the 1040, schedule E or is this something that is reported separately on a different form.

I would be grateful for any advice.

Thanks,

[Rapid Robert]

The K1 is isssued by Linn Energy LLC with my clients SSN - The type of entity on Line I1 is Roth IRA and I2 is checked that the partner is a retirement plan. Should I report this on the 1040, schedule E or is this something that is reported separately on a different form.

Absent any other information, I would not include it anywhere on the tax return. Is this a PTP? That's about the only time I've seen this (doesn't change my answer).

In rare cases there may be UBTI inside the IRA that needs reporting, but this does not sound like one of them.

[Burke]

Sounds like a final distribution from a ROTH IRA which was invested in a limited partnership. So, you have to determine if the TP meets the IRA rules for no taxation on a ROTH -- i.e, holding period, etc.

[Rapid Robert]

Sounds like a final distribution from a ROTH IRA which was invested in a limited partnership.

Nothing was stated about a distribution from an IRA, total or otherwise. It was stated the IRA is a partner and received a K-1 from the partnership, reporting income to the IRA.

[Burke]

Nothing was stated about a distribution from an IRA, total or otherwise. It was stated the IRA is a partner and received a K-1 from the partnership, reporting income to the IRA.

The OP stated that the K-1 was received with the client's SSN on it, not a partnership EIN. He also said it was a Final K-1 (see title) which indicates a distribution may have occurred. This is going to be reported to the IRS as such; so my answer was based on that. He did not give us any info about the amounts of income listed in Boxes 1-11, which would have been helpful, but apparently there was some as he was asking where to report it. If the IRA itself sold the Linn Energy, then the K-1 should have had the partnership EIN on it.

[Rapid Robert]

If the IRA itself sold the Linn Energy, then the K-1 should have had the partnership EIN on it.

Linn Energy is the partnership that issued the K-1 to the IRA (individual). Part I of the K-1(1065) will have the partnership (Linn Energy) EIN, and Part II will have the individual partner (IRA) SSN.

Maybe there is some other scenario that fits the OP, but I can't imagine it. If this is a "final" (total) distribution from a Roth IRA, where is the 1099-R? No such document was mentioned, and it would not make sense in the context of the question.

[Burke]

It has been my experience that Part II usually shows the IRA custodian's EIN on these K-1's, not the individual's SSN. It is confusing to the client as the entity usually mails them to the client's address and the income is not reportable by the client as along as it stays in the IRA. As OP stated, box I2 was checked in Part II that the partner was an IRA plan.