What is UBIT? When does it occur? And how can I remain compliant?
If your IRA owns an asset or interest that produces unrelated business taxable income (UBTI), your IRA may be subject to an unrelated business income tax (UBIT) pursuant to Section 511 of the Internal Revenue Code.
FREE Self-Directed IRA Rules Guide
Is My IRA Responsible for UBIT?
UBIT applies if ALL of the following are true:
Income is derived from “trade or business” activity (i.e., sale of goods and services).
Business activity is not substantially related to exempt status.
Business is regularly carried on by organization.
Generally, IRA investments that can generate UBIT include:
Limited Partnerships (LPs),
Limited Liability Companies (LLCs), and
Any investment that incurs debt financing and/or is involved in an unrelated business.
In this brief training, Retail Sales Manager, John Bowens, breaks down what UBIT is and how it can apply or not apply to your IRA, 401(k) or other tax-advantaged investment account.
What is UBIT? How does it affect my IRA investments?
In this short 5 minute video, you will learn:
When UBIT occurs
How unrelated debt financed income (UDFI) is calculated
When operational businesses such as LLCs or LPs incur UBIT
How the filing process works
How is UBIT calculated? How can I remain compliant with my IRA investments?
In this brief 10 minute video, UBIT will be covered in greater detail and you will learn:
Your options if you suffer a net operating loss (NOL) or have less than $1,000 in unrelated business taxable income
The ability to write off expenses and depreciation for rental properties that incur UBIT within an IRA
The trust tax rates that your IRA is taxed when it incurs UBIT
Proforma analysis of UBIT for a debt-financed real estate property
The 990-T filing process
Why operational businesses incur UBIT and how the process works
We also have put together a guide that dives into even more detail and specific information regarding UBIT. This report is a great resource to share with your CPA, tax professional, or other members of your financial team.
For more frequently asked questions, please visit the UBIT FAQ page.
To assist you in meeting filing requirements, Equity Trust Company is again offering Form 990-T preparation and IRS required electronic payments through the EFTPS (Electronic Federal Tax Payment System) to our clients for their IRAs. To learn more about your 990-T filing options please visit: www.trustetc.com/990T
You are leaving the Trustetc.com to enter the ETC Brokerage Services (Member FINRA/SIPC) website, the registered broker-dealer affiliate of Equity Trust Company. ETC Brokerage Services provides access to brokerage and investment products which ARE NOT FDIC insured. ETC Brokerage does not provide investment advice or recommendations as to any investment. All investments are selected and made solely by self-directed account owners.
