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reliable free tax advice online?

Several years ago I had a question about tax treatment of a bonus and placed the question on a site recommended by a source I trusted. The advice was correct (although it varied somewhat from my accountant), and came from several people at CPA level and above. Unfortunately, I lost the site name, if it even still exists.

Do any MFO members recommend free sites that they've used to answer tax issues?

My question will probably be something along the line of: If I hold MLPs in different tax-advantaged accounts, does the limit before taxes must be paid on distributions of $1000 apply to the total across accounts or to the total in each account?

Thanks in advance.


  • STB65 said:

    Unfortunately, I lost the site name, if it even still exists.

    Do any MFO members recommend free sites that they've used to answer tax issues?

    Try this:

    The guy who runs the website is a true tax expert.
    There is a forum, and it seems that a lot of very tax knowledgeable people participate in the forum.
    It's worth a try.

  • edited September 2014
    I'm not a tax guy, and not at all familiar with MLP's....but I thought I would Google your question.

    Not sure if this is what you are looking for, but check it out:

    This is because some of the MLPs' taxable earnings may be considered unrelated business taxable income (UBTI), or income unrelated to the primary purpose of your tax-sheltered account.

    Each tax-deferred account is allowed a $1,000 deduction on UBTI. After that, UBTI is taxable as ordinary income. That tax bite can reduce returns sharply, especially considering the additional taxes you pay when you withdraw the cash distributions from your account on retirement.

    You might think, "Well, I see a solution. I'll just open several IRAs." Sorry. The IRS thought of that too, and limits UTBI to $1,500 total across all of your tax-deferred accounts, no matter how many you have.

    Further, if you do go over the $1,000 limit on UBTI, your IRA custodian will need to file IRS Form 990-T on your behalf

    "Can I hold MLPs in my IRA?
    Yes, but MLPs may not represent the best investment for a retirement plan. First, an MLP offers significant tax benefits that are better utilized in a taxable account. Secondly, an IRA (or any tax-exempt entity earning income from an outside business) is subject to the “unrelated business income tax” (UBIT) after the first $1,000 of net income from a business that is unrelated to its exempt purpose (unrelated business taxable income, or UBTI). Since an MLP is a pass-through entity, the IRA would be considered to be “earning” the MLP’s business income, which is almost always considered to be unrelated to the IRA’s exempt purpose. If the IRA’s UBTI from all sources is over $1,000, the fund custodian will have to file a return and pay tax on the excess out of the IRA’s funds. Most advisors feel that unless there is reasonable certainty that the net income received from MLPs will be less than $1,000 each year, it is better not to hold them in an IRA. This is equally true of regular and Roth IRAs."

    3. Is the UBTI per IRA custodial account or per individual?

    The answers I've gotten to this is its per individual, which makes sense, although its accounted for and the tax is paid per account (custodian). But if so, this gets interesting, as suppose I have 3 custodial IRAs at different brokerages and each have UBTI of $900, $$600 and $500, respectively. Each custodian would not do anything as the UBTI they each see is under $1, if UBTI is per individual, it then would be my responsibility to tell one of the custodians...who would then file one 990T?? And one web site claims that the IRS allows up to $1,500 of UBTI across multiple tax deferred accounts before the UBT would be assessed...but I have not seen this printed anywhere else, and the web site saying this gave no reference.

  • Here, the Bogleheads are generally a pretty scholarly group:

    Bruce: The $1K limit is supposedly across all retirement accounts and refers to UBTI (again generally the operating earnings of the MLP) It is definately not 1K PER MLP. It is totally unrelated to distributions received in your IRAs. There is some good material on this subject at: ... rimers.htm

    As far as the data I referenced, it's right from the horse's mouth (pg 153): ... inbull.pdf

  • +1 for Not only CPAs but tax attorneys and enrolled agents answer questions on the forums.
  • I'll also give a thumbs up for Another excellent source is misc.taxes.moderated (anyone remember Usenet?)
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