Guest TPALona Posted April 24, 2014 Posted April 24, 2014 IRA has investment in real estate resulting in UBTI. We understand the need for filing a Form 990-T to report the UBTI. But who pays the taxes? If the IRA pays the taxes wouldn't this be treated as a distribution? IRA owner would then need to pay tax on the IRA distribution? Can taxpayer pay the taxes with outside assets?
jpod Posted April 25, 2014 Posted April 25, 2014 It is a liability of the IRA. It should not be a taxable distribution if IRA money is used to pay the IRA's tax liability. Not sure there is a specific IRS statement to that effect, but it seems logical to me. (There may be IRS guidance confirming this in the qualified plan space, and if so I believe the same should apply to IRAs.) Using the same logic, I would think that the depositor's payment of the tax should be treated as an IRA contribution.
masteff Posted April 25, 2014 Posted April 25, 2014 Technically speaking, it is the IRA, not the individual, who files the 990-T and pays the tax. Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
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