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Summary Unrelated Business Taxable Income (UBTI) is the income that can trigger Unrelated Business Income Tax (UBIT) for tax-exempt organizations and retirement accounts. Investors can own MLPs ...
Instead of a Form 1099, MLP investors receive a Schedule K-1 tax form. As a consequence of their pass-through status, holding MLPs in tax-exempt accounts may generate Unrelated Business Income Tax (UBIT). [2] To encourage tax-exempt investors, some MLPs set up C corporation holding companies of limited partner which can issue common equity. [3]
Here’s how a master limited partnership works, examples of MLPs and their pros and cons.
Similar to direct MLP investment, return of capital distributions from an MLP fund structured as a corporation lower an investor’s basis, and taxes are not [...] Beyond the K-1: Tax Treatment ...
Individual retirement accounts generally are subject to tax on income that is taxable to most U.S. tax-exempt entities under 26 U.S.C. §511. 26 U.S.C. §408 contains many of the rules governing the treatment of Individual retirement accounts. §408(e)(1) states: "Any individual retirement account is exempt from taxation under this subtitle ...
When there are tax exempt investors in a fund, they are not subject to U.S. income tax, but are still required to declare and pay taxes on "Unrelated Business Taxable Income" or "UBTI". [2] For tax exempt investors, dividends , royalties , rents , capital gains and interest income are not considered UBTI, but any money earned from conduct ...
MLPs serve as a highly tax-efficient way to own midstream energy infrastructure assets, with ETFs offering an easy, affordable way for investors to gain exposure to the industry. Many investors ...
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