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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 ...
It combines the tax benefits of a partnership with the liquidity of publicly traded securities. To obtain the tax benefits of a pass through, MLPs must generate at least 90% or more of their income from qualifying sources such as from production, processing, storage, and transportation of depletable natural resources and minerals.
For tax exempt investors, their share of the blocker corporation is considered dividend income, and thus they are not subject to tax. [3] Foreign investors similarly avoid U.S. trade or business income tax (although they will be subject to tax in their home country on any dividends received). [3]
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 ...
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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 ...
Typically, 70-100% of MLP distributions have been considered a tax-deferred return of capital, which means one does not pay taxes on that portion of the distribution until the investor sells his ...
For example, U.S. tax law provides that trading in securities for the taxpayer's own account will not constitute a U.S. trade or business. [16] Thus foreign hedge funds formed as corporations do not generally pay corporate income tax. [17] Domestic tax-exempt entities face similar concerns when investing in funds structured as partnerships.
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