K-1 inside IRA

[ameritax]

are there any reporting requirements for a K-1 that is an IRA?

The instructions on the K-1 say there is a $250 fine for failure to report this tax shelter registration number

Should the 8751 be filed at all?
Thanks,
memaw

[Matt Sova]

K-1 in an IRA

I have never recorded anything from a K-1 where the IRA is the partner. After all, where would you report it? The IRA does not file a tax return.

Matt

[Joe Btfsplk]

K-1

There should be something on the K-1 form itself in Part I, item E which shows the Tax Shelter Number if any.

I don't think there is any place to show it on Schedule E. The only reporting would be on the LLC or partnership's return.

[BOB W]

Owner

... of the Mutual fund or Partnership is the IRA, not the owner of the IRA. The K-1 goes to the IRA adm., if they even need it.

[Joe Btfsplk]

Tax Shelter Registration reporting

Q: Should the 8751 be filed at all?
A: You typed the wrong form number, but the answer is that the pertnership or LLC
would file it, NOT the recipient of the K-1.

It seems particularly irrelevant in an IRA since any tax shelter advantage would be lost in a tax-deferred account which is taxed upon withdrawals.

Also, you can assume that it is not a tax shelter if the K-1 does not so indicate.

[Snaggletooth]

Something Amiss

Something is bad wrong with this picture.

Who or what has invested in a tax shelter? Has a promoter offered an IRA to some individual? I can almost assuredly say that if a tax shelter were offered in a 401k plan, it would not be an approved plan.

Maybe a better question would be, "Why on earth would anyone invest in one if the earnings were deferred?" As was pointed out by Joe Btlfwlkmwfjqkzsmv, the principal benefits of such a vehicle would be lost in the deferral.

Ameritax, welcome to the board, I don't recall seeing you in the past. Give us a little more information about just exactly "who's who" with this question and we'll do our best to answer.

[Joe Btfsplk]

Rephrase the question

I think the question needs to be restated. A person with a self-directed IRA might conceivabley invest in something like a tax shelter even though the benefits of the tax shelter would be lost in an IRA. I've known of people to invest in an annuity within their IRA.

As far as I know, there would be no reason for anyone to report a tax shelter registration on their Form 1040 whether it was in the IRA or not. The registration is by the tax shelter itself.

If you were preparing the return for Merrill Lynch and they were investing clients' money in tax shelters within an IRA, then you might need to question how to proceed.

[jainen]

Form 8271

>>there would be no reason for anyone to report a tax shelter registration on their Form 1040 whether it was in the IRA or not<<

They did away with the tax shelter numbers a couple of years ago, but clients who get K-1's from older tax-shelter investments still have to file Form 8271. (Since an IRA is not reporting any income or deductions from such a K-1, it does not have to file Form 8271.)