You fill out a normal K-1 unless the investment is subject to UBIT. Then each partner using a retirement account would have to fill out IRS form 990-T.
Make sure to put the IRA LLC name instead of the name titling of the partner.
Rocket Dollar defaults to FLast RD LLC. However, some of our customers have multiple accounts or custom LLC names. Please confirm this LLC name with the customer, as Rocket Dollar cannot discuss account information with a partner without the approval of the customer.
If it is a solo 401(k) that owns the partnership or investment asset, the name of the retirement plan should be on the K1.
Each customer can have a custom retirement plan name. It is usually tied to their sole proprietorship or their business name.
What about the taxes of the Rocket Dollar client and the impact of filing the K1?
The Rocket Dollar client should file this K-1 in their records. An IRA LLC or a Solo 401(k) Trust executed correctly should not have to pay taxes. If you report UBIT and UBTI on the K-1, then that individual will have to file a 990 - T with their CPA.
Make sure to check on UBIT and UBTI with a CPA.
Most passive investments do not generate unrelated business income tax (UBIT)
Some, however, do, and that taxable income is called unrelated business income tax. (UBTI)
UBTI is then reported in box 20 of the K-1, under other information. Here are the codes to report it. Consult a CPA before finishing any K-1 or 990 - T filing.
20V1 - UBTI - Ordinary Income
20V2 - UBTI - Net Rental Income
20V3 - UBTI - Dividend Income
20V4 - UBTI - Short-Term Capital Gain
20V5 - UBTI - Long Term Capital Gain
20V6 - UBTI - Unrecaptured Sec. 1250 gan
20V7 - UBTI - SEC. 1231 gain
20V8 - UBTI - Long-Term Capital Gain, Line 11F
20V9 - UBTI - Deferred Sec 108
20v10 - UBTI - Other Income
20v11 - UBTI - Investment Interest Income Expense
20v12 - UBTI - Sec. 59(e)(2) expenditures
20v13 - UBTI - Foreign Tax paid or accrued
I need to learn more about UBIT and UBTI...
You can read our other knowledge base article here.
What if I still have advanced questions about UBIT and UBTI?
The 990-T form is a complex tax form that not all CPAs are familiar with. There can be specific needs for UBIT for each investment. You can contact Rocket Dollar to be introduced to a CPA that has expertise in this area. This CPA can do a complimentary call to learn about your situation and if they would be able to help.
You may email info@rocketdollar.com or call our Sales and partnerships line 1-855-762-5383 to be introduced.
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