Tax Tips & Traps for Individuals

IRAs and tax on unrelated business taxable income.
Not all earnings within an IRA account are tax free or tax deferred. If you invest in your IRA funds in a business including ownership interest through a partnership or S corporation, you may be subject to "Unrelated Business Taxable Income" (UBTI). UBTI includes net income form debt-financed investments such as mortgaged property. Thus if you own a rental property within an IRA that carries a mortgage, you are subject to the UBTI. This UBTI applies to IRAs, SEPs, Simples, ROTH IRAs, ESAs and MSAs. If you are subject to this UBTI a tax return is required and estimates tax payments.
updated 2/2/15