K-1 Question

[GIMoe]

Client brings in a K-1 with the following information:

Part II
Box H (Name of Partner): CGM IRA CUSTODIAN
Box I shows Limited Partner

Box K (Type of Entity): IRA

Box N shows a slight Gain and has SECTION 704(b) book checked off


Part III
Lines 5, 8, 13 (Code V), & Line 20 (Code A) shows gains

Line 11 (Code F and Code C) shows losses

Line 19 (Distributions) (Code A) shows a 0


Can anyone who has seen something like this before explain it to me? Why would my client be issued a K-1 for an IRA?

I appreciate any input or response.

[outwest]

Pretty simple..

rather than stock, the IRA invested in a limited partnership. Nice information, no reporting required any more than if he had stock in the IRA.

[GIMoe]

No reporting

rather than stock, the IRA invested in a limited partnership. Nice information, no reporting required any more than if he had stock in the IRA.

So, this K-1 is informational only? Not required to show it on the return? Just want to verify because I had never seen it done this way before.

[George Boutwell]

Caveat UBTI

Does the K-1 show an amount for UBTI? In most cases, IRAs which receive more than the current $1,000 UBTI exclusion must file Form 990T by April 17.

Your client has probably invested in a publicly traded partnership (PTP), and theoretically he is an idiot, because most of these are tax shelters and have tax advantages that are lost in an IRA. It's sort of like buying municipal bonds in a retirement account. But if you look at the increase in share price, they have outperformed many other investment alternatives.

[GIMoe]

Ubti

Does the K-1 show an amount for UBTI? In most cases, IRAs which receive more than the current $1,000 UBTI exclusion must file Form 990T by April 17.

Your client has probably invested in a publicly traded partnership (PTP), and theoretically he is an idiot, because most of these are tax shelters and have tax advantages that are lost in an IRA. It's sort of like buying municipal bonds in a retirement account. But if you look at the increase in share price, they have outperformed many other investment alternatives.

The box for PTP is unchecked so I would conclude that this is not a PTP. I see no amount that has the label UBTI.

[JG EA]

My client got one with the cute little booklet of K-1 instructions which would really lead someone as simple as myself to assume it should be filed and that I should read and apply the cute little booklet. I asked the client's broker why do they send the IRA K-1 to the client. They said it was a mistake and I should fax it to the tax department of the brokerage. I said thank you for the extra work - I really appreciate it. I kept the itty bitty instructions with all the others. After tax season I'll get out the magnifying glass and see what it says.

But after thinking about it, it was the only thing the client seemed to have gotten on this part of his IRA investment. It didn't seem to show up anywhere else. So, maybe that's why they send them out, so the client could see how it was doing. And in this case it was a PTP and a tax shelter. I didn't even think about how silly that was so thanks for pointing that out George. (That's a real thanks not the other kind of thanks in the first paragraph.)