Trading on margin in qualified retirement accounts is considered debt-financed income and therefore leads to UBTI (unrelated business income tax) / UBIT.
Many other forms of leverage (futures, short sales, gains from lapse or termination of short options, repurchase agreements, notional principal contracts) are either explicitly exempt in the code from generating UBTI, or don't generate UBTI by virtue of entailing no borrowing of money in the traditional sense.
What about using the proceeds from options sales (for example options box spreads) on a rolling basis to buy additional equities, will it generate UBTI? Is it debt-financed income, as the short options create an obligation (albeit the size of the future obligation depends on the performance of the underlying); or not, as (by the same argument that applies to futures) it does not entail borrowing money in the traditional sense?
