[setexenv]

Am I creating a future accounting/tax return nightmare by keeping a Limited Partnership stock paying large dividends in my SEP IRA?:eek:

[AtlantaTaxExpert]

Is the stock a publicly-traded equity, or is privately-held?

[setexenv]

It is a publicly traded stock... NuStar (NS)...

[AtlantaTaxExpert]

If it is publicly traded, then buying it as an equity in your SEP IRA portfolio perfectly legal with no "accounting nightmare" that are any worse than buying a mutual fund. The dividends will accrue in your IRA tax-deferred, and any increase in the stock will also be tax deferred.

The only real disadvantage is the fact that the stock, when sold at a profit, will NOT be eligible for favorable capital gains treatment. The profit will be taxed as ordinary income when distributed from the IRS.

[IntlTax]

I wonder if the LP will have any UBTI flowing up so that the IRA is subject to the unrelated business income tax.

[AtlantaTaxExpert]

On a publicly-traded stock?

[IntlTax]

Limited partnerships don't have stock. They have partnership interests.

[AtlantaTaxExpert]

Granted, but they are publicly traded, and it would seem that this is exclusively a for-profit limited partnership.

Is not UBTI an issue only in tax-exempt organizations, such as charitable remainder trusts or non-profit organizations like a 501c?

[IntlTax]

An IRA is a tax exempt entity.

[AtlantaTaxExpert]

Yes, the IRA for the stock owner IS an tax-exempt entity, but the limited partnership is NOT.

[IntlTax]

Yes, but the profits flowing up from the partnership may have some business income that may trigger UBTI to the IRA.

[AtlantaTaxExpert]

I really do not see how, but I will yield to your greater level of experience and expertise in these matters.

[Foil]

Limited partnerships don't have stock. They have partnership interests.

So... are the dividends received form the "partnership interests" shares treated the same way at tax time as the dividends from a company stock? (eg. OKE & OKS)