UBTI and IRA

[Lregan]

Hello, I have a client that has received a 990-T in regards to unrelated business taxable income from a partnership that is held within his IRA. The name of the organization listed on the 990-T is my clients name, the EIN listed is not his SS#, nor is it the EIN listed on his 1099-R from the RIC that holds his IRA. The address is the address that is listed on his 1099-R. Under Box B of the heading on 990-T: the box is checked for exempt under section 408(e).  

Comments on the cover letter state that as a result of the UBTI the IRA was debited by the amount of tax owed.  

I have not seen this in the past. Is this the way UBTI is reported?  Where is the EIN # coming from?  My client is not an exempt organization, nor am I aware of him having an EIN #, other than is SS#.

Can anyone clarify if this sounds legitimate?  

[sjrcpa]

IRAs are generally tax exempt.

But if they have Unrelated Business Taxable income, it is taxable. Form 990-T is used to report and pay the tax. Mostly I see this arise from Publicly Traded Partnership income.

I haven't a clue about the RIN.

[qbteachmt]

The custodian is the trustee for your client's IRA. That would be their EIN. The retirement account is tax exempt normally. There was an >$1,000 event that doesn't qualify. Your client should know about their own investments.

The tax, if any, would have been paid from that IRA and reduces the value of the IRA account. Think of this as getting a net value from that investment: profit or gain or earnings minus the tax.