Once again in 2012 equity investors failed to keep up with their benchmark; the S&P rose 8.21%, while equity-fund investors made just 4.25%. According to Barron's, learning to sell puts when financial news turns dour is the antidote to underperformance. [View news story]
Hi Clayton,
The data clearly shows that selling puts, as a strategy, such as the .PUT Index, will outperform owning stocks, over the long run.
The most interesting part of the data, is that selling puts as part of a strategy out-performs owning stocks by its widest margin in falling markets, and less so in rising markets. So, if you want to be invested and suspect a market top, a put selling strategy can be truly beneficial.
Those familiar with options should instinctively know this.
So, if you think it's a market top, you can get out, or short, (like so many mistakenly did during this five year rise), hold, try to time the market or engage in an option strategy.
I responded to this question twice in earlier comments. So, forgive me if I copy from those answers....
There are plenty of examples of something getting double taxed. How about income and FICA taxes on wages, how about income tax then estate tax, how about dividends tax at two levels. Nothing gets taxed at rates more than 100%, but many things get taxed twice.
The double taxation of the MLP is the result of the accounting.
I should have made this clearer with a different example than the one I used , so I'll try again.
We can agree that the pre-zero distributions are not taxed, but eventually taxed as ordinary income.
Now if the post-zero distributions were taxed at LTCG, they would have a beneficial tax as compared to the pre-zero.
If you work through the example (or any other you wish to use) you will find that there is, in fact, a second tax on the LTCG distributions. However, the second tax causes the pre-zero LTCG distribution to revert back to ordinary income. So, there is a second tax, but the rate is the differential between LTCG and ordinary income. So for most it would be about 20% (43%-23%).
The point I was trying to make is that the post-zero tax at LTCG is not as favorable as it appears. It is more like a "down payment" on the eventual ordinary income tax.
Here's the section of the article that has caused this distress...
"The "quirkiness" of MLPs means that, when units are sold, the cumulative distributions not previously taxed at ordinary rates will now be taxed at ordinary rates (recapture).
The nightmare is that this extends to distributions previously taxed at capital gains rates as a result of ROC. That's right, ROC distributions will be subject to capital gains tax as received and taxed again as ordinary income when units are sold. Welcome to the world of double taxation"
What I should have said, in the last sentence is ...taxed again TO ordinary rates..., or taxed again to increase the effective tax rate to ordinary income...or something similar. Instead I decided to provide an example that would show the net effect.
So, I take full responsibility for any confusion as not having given more examples. I wrongly thought that the example I gave would enable readers to figure it out, but they seem to be caught up in the language more than the outcome.
I appreciate your comments as they give me an opportunity to detail this
I've answered this exact inquiry earlier, I'm repeating here, again ,....
There are plenty of examples of something getting double taxed. How about income and FICA taxes on wages, how about income tax then estate tax, how about dividends tax at two levels. Nothing gets taxed at rates more than 100%, but many things get taxed twice.
The double taxation of the MLP is the result of the accounting.
I should have made this clearer with a different example than the one I used , so I'll try again.
We can agree that the pre-zero distributions are not taxed, but eventually taxed as ordinary income.
Now if the post-zero distributions were taxed at LTCG, they would have a beneficial tax as compared to the pre-zero.
If you work through the example (or any other you wish to use) you will find that there is, in fact, a second tax on the LTCG distributions. However, the second tax causes the pre-zero LTCG distribution to revert back to ordinary income. So, there is a second tax, but the rate is the differential between LTCG and ordinary income. So for most it would be about 20% (43%-23%).
The point I was trying to make is that the post-zero tax at LTCG is not as favorable as it appears. It is more like a "down payment" on the eventual ordinary income tax.
So, I take full responsibility for any confusion as not having given more examples. I wrongly thought that the example I gave would enable readers to figure it out, but they seem to be caught up in the language more than the outcome.
I appreciate your comments as they give me an opportunity to detail this
There are plenty of examples of something getting double taxed. How about income and FICA taxes on wages, how about income tax then estate tax, how about dividends tax at two levels. Nothing gets taxed at rates more than 100%, but many things get taxed twice.
The double taxation of the MLP is the result of the accounting.
I should have made this clearer with a different example than the one I used , so I'll try again.
We can agree that the pre-zero distributions are not taxed, but eventually taxed as ordinary income.
Now if the post-zero distributions were taxed at LTCG, they would have a beneficial tax as compared to the pre-zero.
If you work through the example (or any other you wish to use) you will find that there is, in fact, a second tax on the LTCG distributions. However, the second tax causes the pre-zero LTCG distribution to revert back to ordinary income. So, there is a second tax, but the rate is the differential between LTCG and ordinary income. So for most it would be about 20% (43%-23%).
The point I was trying to make is that the post-zero tax at LTCG is not as favorable as it appears. It is more like a "down payment" on the eventual ordinary income tax.
So, I take full responsibility for any confusion as not having given more examples. I wrongly thought that the example I gave would enable readers to figure it out, but they seem to be caught up in the language more than the outcome.
I appreciate your comments as they give me an opportunity to detail this.
Once again in 2012 equity investors failed to keep up with their benchmark; the S&P rose 8.21%, while equity-fund investors made just 4.25%. According to Barron's, learning to sell puts when financial news turns dour is the antidote to underperformance. [View news story]
This advice is bad only to the extent that it is not complete enough.
Selling puts is very effective strategy if implemented properly. Just look at the .PUT index from the CBOE for one such strategy.
Granted, most people will just sell mindlessly, but the fault lies not in the recommendation, but in failure to execute a strategy.
Borrowing form the military, selling puts is a tactic not a strategy
The Facts Are In - MLPs Work Great In IRAs [View article]
Hi jklk,
If you read down to some other commenters, there are tax experts that have confirmed the outcome reported and even paid the tax when they sold.
I could spend a lot of time giving illustrations of Code Sections creating taxable income that people aren't aware and file forms that are technically deficient. Just because they get away does mean it isn't subject to tax.
The Facts Are In - MLPs Work Great In IRAs [View article]
Hi Born Again,
I would fire whoever told you that IRA's are not subject to UBTI because IRAs are not 501((a) or 529 plans.
This argument is nothing more than a smoke screen floated over a year ago by some self proclaimed experts.
Check out IRS Pub 598, page 2, Item 1---Organizations Subject to Tax and you will find that IRAs, Roths, etc are specifically listed by name (not code section, so as to leave absolutely nothing in doubt) as being subject to UBTI.
Let's close the book on this insanity and move on.
The Facts Are In - MLPs Work Great In IRAs [View article]
Hi Afahm,
Thanks.
I agree with you. This area is way more complicated than even professionals can ponder. It's aided a little that low-level IRS auditors don't even know how to handle it.
Bring it up to most CPAs and they just go "huh".
I have found after counseling CPAs and tax people over nearly 30 years on this issue that instead of walking them through the code, it's a lot easier to point out the instructions to 990-T. Hard to get away from that.
But, I would wager that 90% of taxpayers just use a software program (like Turbo) or do it manually without ever reading the complete instructions. Heck, how many of us read instructions on anythng until we louse it up and go back to figure out what we did wrong.
So don't be too surprised if the folks at Schwab haven't read the Code.
You likely have suspended losses from prior years.
Suspended losses are usually the result of excess depreciation over distributions. You can carry these suspended losses forwards to offset future gains so it washes.
Unfortunately, the MLP doesn't keep track of them. Stupid, they should.
If you haven'y been tracking them, go back to previous years K-1s and you should notice either negative UBTI or a loss on line 1. It's only a matter of a few years, and hopefully you still have them
Just tally them up and subtract from the ordinary gains on SupplSchedule.
If you read the instructions for the SupplSchedule (just above all the numbers) you will see that they don't include these amounts.
If you can't find your past k-1s, then consider "fudging" down to your distributions. This isn't accurate, but the ordinary gain can never be greater than the distributions, so you're O.K. If the number was much larger than you actually show, I wouldn't fudge, but at these levels 100% accuracy isn't that much of a big deal.
p.s. I have an article pending that explains the k-1 and how to do all this. SA may not publish it because it doesn't involve "trading ideas", as they say it's just instructional.
I've let them know that readers are screaming fo rthis.
In any event, if you don't see it published by Tuesday, I'll post it as a blog. I don't know if readers get alerts on blogs (I rearely use them) so just check my blog on Wednesday if you don't see it as an artilce, or e-mail me.
The Facts Are In - MLPs Work Great In IRAs [View article]
Hi Afahm,
For tax purposes, "ordinary gain" is a defined term. It means gain that is to be recognized as ordinary income as opposed to gain that is, say recognized as capital gain. (note: capital gain, which is detailed separately in the SuppSchedule, is not taxed as UBTI).
Now, I'll grant you that it may seem an UNUSUAL type of gain, in that it's counter-intuitive within an IRA, but "ordinary gain" has a specific meaning when it comes to taxes and for these purposes it is realized as UBTI.
But you need to go beyond your feeling of what "ordinary" is and stick to the code definition.
Just in case you had any doubts, the instructions to form 990-T are specific when they say "ordinary gains" gains resulting from the sale of 1245, 1250..etc.. property is taxed. No one disputes that the "ordinary gains" reported on your SuppSchdl is 1245 property.
On second thought, Alan will probably come up with some belief that it's not 1245 property, just to keep this preposterous idea floating.
So when the tax code says "ordinary gain" and the MLP characterizes it as "ordinary gain" and the 990-T tells you "ordinary gain" is taxed, you have no where to hide.
Oftentimes it is hard to come to grips with something that doesn't seem to make sense. It's a whole other subject, but the taxation does make sense. So, it's time to put away the result you would like to believe and live with the result that is.
Non-recourse liabilities increase basis, but not the capital account. Once the capital account reaches zero, future distributions are taxed ROC-LTCG. It doesn't seem you are saying anything different, but If you are saying that non-recourse debt delays this...I disagree.
Now, recapture only exists on sale. You seem to be saying this.
My example has $200k of ordinary income, and $100k of LTCG. You say the same thing.
So, the only thing I see that could possibly be different is if you conclude, that on account of non-recourse debt, the ROC that I illustrate as LTCG is not taxed until sale (or some very distant time) as a result of the non-recourse debt I disagree.
Your statement "....a partner doesn't run out of basis until his capital account is very negative.." is not correct. The capital account cannot go negative. Instead, any amounts that would cause it to go negative are immediately taxed as ROC-LTCG.
Since we both agree on the total amount that is taxed and the tax characteristics of them, the only issue I can see is if you disagree in the timing of the tax. Are you suggesting that the capital account can go negative because of non-recourse debt and that this then defers the recognition of ROC-LTCG to sale? If so, I would like to see authority, because that flies in the face of everything in the Code that I have ever seen.
The Facts Are In - MLPs Work Great In IRAs [View article]
Hi Alan,
I'm speechless. But I can still type.
It is clear you have trouble with this. If you can't swim it's a good idea to stay out of the water.
I'm throwing you this life preserver, please catch it, or you'll drown.
First, the 4797 isn't filed with your return, it's filed by the custodian on behalf of the IRA, just like the 990-T.
I specifically stated that one should be sure that Schwab is aware and files this and a 751 statement.
Now, when you sell your MLP IRA, the proceeds are split into three components---remaining basis, ordinary gains (recapture) and cap gains (balance). The Supplemental Sales Schedule provided in you K-1 package will clearly indicate each component. You need only deal with the ordinary gains portion.
Now, go back to 990-T and read what you missed in your last post. Oh well, I'll save you the time..here it is....
"...and ordinary gains on sections 1245, 1250, 1252, 1254, and 1255 property are taxed. See Form 4797."
Now, as far as Schwab goes, I respect your willingness to accept they are doing it right. I have nothing to base an adverse opinion.
Now you're an actuary, familiar with numbers, Codes, etc. and yet you, completely missed the section that I quoted supra. You also had trouble comprehending that 4797 is filed by the IRA custodian.
I think it would be wise to consider, just consider, the possibility that some clerk, making $6/hour, sitting in front of a screen all day, working for a stock brokerage firm, might, just might, have even less capabilities than you. And if you can be so confused and misled by this, then imagine what could be at that end.
One last comment, I would really be interested to know, when you studied 1245 what particular part of it led you to believe it doesn't apply to IRAs. Because you most certainly have found a section that I can't seem to find.
Having done battle with IRS on many occasions I would love to just go up to them and show them the section you found and point out how the language in 990-T contradicts the Code. Can't wait......
751 is just a two sentence statement (you can google for it) that says you have reported the ordinary income portion in accordance with the Code and the MLP has records that correspond to your reporting.
751 as no numbers. It just like the "I sign this form under penalties of perjury.
Once again in 2012 equity investors failed to keep up with their benchmark; the S&P rose 8.21%, while equity-fund investors made just 4.25%. According to Barron's, learning to sell puts when financial news turns dour is the antidote to underperformance. [View news story]
The data clearly shows that selling puts, as a strategy, such as the .PUT Index, will outperform owning stocks, over the long run.
The most interesting part of the data, is that selling puts as part of a strategy out-performs owning stocks by its widest margin in falling markets, and less so in rising markets. So, if you want to be invested and suspect a market top, a put selling strategy can be truly beneficial.
Those familiar with options should instinctively know this.
So, if you think it's a market top, you can get out, or short, (like so many mistakenly did during this five year rise), hold, try to time the market or engage in an option strategy.
MLPs - A Reality Check ? [View article]
I responded to this question twice in earlier comments. So, forgive me if I copy from those answers....
There are plenty of examples of something getting double taxed. How about income and FICA taxes on wages, how about income tax then estate tax, how about dividends tax at two levels. Nothing gets taxed at rates more than 100%, but many things get taxed twice.
The double taxation of the MLP is the result of the accounting.
I should have made this clearer with a different example than the one I used , so I'll try again.
We can agree that the pre-zero distributions are not taxed, but eventually taxed as ordinary income.
Now if the post-zero distributions were taxed at LTCG, they would have a beneficial tax as compared to the pre-zero.
If you work through the example (or any other you wish to use) you will find that there is, in fact, a second tax on the LTCG distributions. However, the second tax causes the pre-zero LTCG distribution to revert back to ordinary income. So, there is a second tax, but the rate is the differential between LTCG and ordinary income. So for most it would be about 20% (43%-23%).
The point I was trying to make is that the post-zero tax at LTCG is not as favorable as it appears. It is more like a "down payment" on the eventual ordinary income tax.
Here's the section of the article that has caused this distress...
"The "quirkiness" of MLPs means that, when units are sold, the cumulative distributions not previously taxed at ordinary rates will now be taxed at ordinary rates (recapture).
The nightmare is that this extends to distributions previously taxed at capital gains rates as a result of ROC. That's right, ROC distributions will be subject to capital gains tax as received and taxed again as ordinary income when units are sold. Welcome to the world of double taxation"
What I should have said, in the last sentence is ...taxed again TO ordinary rates..., or taxed again to increase the effective tax rate to ordinary income...or something similar. Instead I decided to provide an example that would show the net effect.
So, I take full responsibility for any confusion as not having given more examples. I wrongly thought that the example I gave would enable readers to figure it out, but they seem to be caught up in the language more than the outcome.
I appreciate your comments as they give me an opportunity to detail this
MLPs - A Reality Check ? [View article]
I've answered this exact inquiry earlier, I'm repeating here, again ,....
There are plenty of examples of something getting double taxed. How about income and FICA taxes on wages, how about income tax then estate tax, how about dividends tax at two levels. Nothing gets taxed at rates more than 100%, but many things get taxed twice.
The double taxation of the MLP is the result of the accounting.
I should have made this clearer with a different example than the one I used , so I'll try again.
We can agree that the pre-zero distributions are not taxed, but eventually taxed as ordinary income.
Now if the post-zero distributions were taxed at LTCG, they would have a beneficial tax as compared to the pre-zero.
If you work through the example (or any other you wish to use) you will find that there is, in fact, a second tax on the LTCG distributions. However, the second tax causes the pre-zero LTCG distribution to revert back to ordinary income. So, there is a second tax, but the rate is the differential between LTCG and ordinary income. So for most it would be about 20% (43%-23%).
The point I was trying to make is that the post-zero tax at LTCG is not as favorable as it appears. It is more like a "down payment" on the eventual ordinary income tax.
So, I take full responsibility for any confusion as not having given more examples. I wrongly thought that the example I gave would enable readers to figure it out, but they seem to be caught up in the language more than the outcome.
I appreciate your comments as they give me an opportunity to detail this
MLPs - A Reality Check ? [View article]
There are plenty of examples of something getting double taxed. How about income and FICA taxes on wages, how about income tax then estate tax, how about dividends tax at two levels. Nothing gets taxed at rates more than 100%, but many things get taxed twice.
The double taxation of the MLP is the result of the accounting.
I should have made this clearer with a different example than the one I used , so I'll try again.
We can agree that the pre-zero distributions are not taxed, but eventually taxed as ordinary income.
Now if the post-zero distributions were taxed at LTCG, they would have a beneficial tax as compared to the pre-zero.
If you work through the example (or any other you wish to use) you will find that there is, in fact, a second tax on the LTCG distributions. However, the second tax causes the pre-zero LTCG distribution to revert back to ordinary income. So, there is a second tax, but the rate is the differential between LTCG and ordinary income. So for most it would be about 20% (43%-23%).
The point I was trying to make is that the post-zero tax at LTCG is not as favorable as it appears. It is more like a "down payment" on the eventual ordinary income tax.
So, I take full responsibility for any confusion as not having given more examples. I wrongly thought that the example I gave would enable readers to figure it out, but they seem to be caught up in the language more than the outcome.
I appreciate your comments as they give me an opportunity to detail this.
Once again in 2012 equity investors failed to keep up with their benchmark; the S&P rose 8.21%, while equity-fund investors made just 4.25%. According to Barron's, learning to sell puts when financial news turns dour is the antidote to underperformance. [View news story]
Selling puts is very effective strategy if implemented properly. Just look at the .PUT index from the CBOE for one such strategy.
Granted, most people will just sell mindlessly, but the fault lies not in the recommendation, but in failure to execute a strategy.
Borrowing form the military, selling puts is a tactic not a strategy
The Facts Are In - MLPs Work Great In IRAs [View article]
If you read down to some other commenters, there are tax experts that have confirmed the outcome reported and even paid the tax when they sold.
I could spend a lot of time giving illustrations of Code Sections creating taxable income that people aren't aware and file forms that are technically deficient. Just because they get away does mean it isn't subject to tax.
That's why the IRS has auditors and tax courts.
The Facts Are In - MLPs Work Great In IRAs [View article]
I would fire whoever told you that IRA's are not subject to UBTI because IRAs are not 501((a) or 529 plans.
This argument is nothing more than a smoke screen floated over a year ago by some self proclaimed experts.
Check out IRS Pub 598, page 2, Item 1---Organizations Subject to Tax and you will find that IRAs, Roths, etc are specifically listed by name (not code section, so as to leave absolutely nothing in doubt) as being subject to UBTI.
Let's close the book on this insanity and move on.
The Facts Are In - MLPs Work Great In IRAs [View article]
Thank you, thank you, thank you for entering this thread.
I've been fighting this battle almost single-handed (actually rip2451 helps, too).
It's nice to get someone with expertise to confirm. It certainly takes off a lot of pressure.
RK
The Facts Are In - MLPs Work Great In IRAs [View article]
Thanks.
I agree with you. This area is way more complicated than even professionals can ponder. It's aided a little that low-level IRS auditors don't even know how to handle it.
Bring it up to most CPAs and they just go "huh".
I have found after counseling CPAs and tax people over nearly 30 years on this issue that instead of walking them through the code, it's a lot easier to point out the instructions to 990-T. Hard to get away from that.
But, I would wager that 90% of taxpayers just use a software program (like Turbo) or do it manually without ever reading the complete instructions. Heck, how many of us read instructions on anythng until we louse it up and go back to figure out what we did wrong.
So don't be too surprised if the folks at Schwab haven't read the Code.
Best of luck, keep me informed.
MLPs - A Reality Check ? [View article]
You likely have suspended losses from prior years.
Suspended losses are usually the result of excess depreciation over distributions. You can carry these suspended losses forwards to offset future gains so it washes.
Unfortunately, the MLP doesn't keep track of them. Stupid, they should.
If you haven'y been tracking them, go back to previous years K-1s and you should notice either negative UBTI or a loss on line 1. It's only a matter of a few years, and hopefully you still have them
Just tally them up and subtract from the ordinary gains on SupplSchedule.
If you read the instructions for the SupplSchedule (just above all the numbers) you will see that they don't include these amounts.
If you can't find your past k-1s, then consider "fudging" down to your distributions. This isn't accurate, but the ordinary gain can never be greater than the distributions, so you're O.K. If the number was much larger than you actually show, I wouldn't fudge, but at these levels 100% accuracy isn't that much of a big deal.
p.s. I have an article pending that explains the k-1 and how to do all this. SA may not publish it because it doesn't involve "trading ideas", as they say it's just instructional.
I've let them know that readers are screaming fo rthis.
In any event, if you don't see it published by Tuesday, I'll post it as a blog. I don't know if readers get alerts on blogs (I rearely use them) so just check my blog on Wednesday if you don't see it as an artilce, or e-mail me.
The Facts Are In - MLPs Work Great In IRAs [View article]
For tax purposes, "ordinary gain" is a defined term. It means gain that is to be recognized as ordinary income as opposed to gain that is, say recognized as capital gain. (note: capital gain, which is detailed separately in the SuppSchedule, is not taxed as UBTI).
Now, I'll grant you that it may seem an UNUSUAL type of gain, in that it's counter-intuitive within an IRA, but "ordinary gain" has a specific meaning when it comes to taxes and for these purposes it is realized as UBTI.
But you need to go beyond your feeling of what "ordinary" is and stick to the code definition.
Just in case you had any doubts, the instructions to form 990-T are specific when they say "ordinary gains" gains resulting from the sale of 1245, 1250..etc.. property is taxed. No one disputes that the "ordinary gains" reported on your SuppSchdl is 1245 property.
On second thought, Alan will probably come up with some belief that it's not 1245 property, just to keep this preposterous idea floating.
So when the tax code says "ordinary gain" and the MLP characterizes it as "ordinary gain" and the 990-T tells you "ordinary gain" is taxed, you have no where to hide.
Oftentimes it is hard to come to grips with something that doesn't seem to make sense. It's a whole other subject, but the taxation does make sense. So, it's time to put away the result you would like to believe and live with the result that is.
MLPs - A Reality Check ? [View article]
I'm not so sure I'm with you on this.
Non-recourse liabilities increase basis, but not the capital account. Once the capital account reaches zero, future distributions are taxed ROC-LTCG. It doesn't seem you are saying anything different, but If you are saying that non-recourse debt delays this...I disagree.
Now, recapture only exists on sale. You seem to be saying this.
My example has $200k of ordinary income, and $100k of LTCG. You say the same thing.
So, the only thing I see that could possibly be different is if you conclude, that on account of non-recourse debt, the ROC that I illustrate as LTCG is not taxed until sale (or some very distant time) as a result of the non-recourse debt I disagree.
Your statement "....a partner doesn't run out of basis until his capital account is very negative.." is not correct. The capital account cannot go negative. Instead, any amounts that would cause it to go negative are immediately taxed as ROC-LTCG.
Since we both agree on the total amount that is taxed and the tax characteristics of them, the only issue I can see is if you disagree in the timing of the tax. Are you suggesting that the capital account can go negative because of non-recourse debt and that this then defers the recognition of ROC-LTCG to sale? If so, I would like to see authority, because that flies in the face of everything in the Code that I have ever seen.
The Facts Are In - MLPs Work Great In IRAs [View article]
I'm speechless. But I can still type.
It is clear you have trouble with this. If you can't swim it's a good idea to stay out of the water.
I'm throwing you this life preserver, please catch it, or you'll drown.
First, the 4797 isn't filed with your return, it's filed by the custodian on behalf of the IRA, just like the 990-T.
I specifically stated that one should be sure that Schwab is aware and files this and a 751 statement.
Now, when you sell your MLP IRA, the proceeds are split into three components---remaining basis, ordinary gains (recapture) and cap gains (balance). The Supplemental Sales Schedule provided in you K-1 package will clearly indicate each component. You need only deal with the ordinary gains portion.
Now, go back to 990-T and read what you missed in your last post. Oh well, I'll save you the time..here it is....
"...and ordinary gains on sections 1245, 1250, 1252, 1254, and
1255 property are taxed. See Form 4797."
Now, as far as Schwab goes, I respect your willingness to accept they are doing it right. I have nothing to base an adverse opinion.
Now you're an actuary, familiar with numbers, Codes, etc. and yet you, completely missed the section that I quoted supra. You also had trouble comprehending that 4797 is filed by the IRA custodian.
I think it would be wise to consider, just consider, the possibility that some clerk, making $6/hour, sitting in front of a screen all day, working for a stock brokerage firm, might, just might, have even less capabilities than you. And if you can be so confused and misled by this, then imagine what could be at that end.
One last comment, I would really be interested to know, when you studied 1245 what particular part of it led you to believe it doesn't apply to IRAs. Because you most certainly have found a section that I can't seem to find.
Having done battle with IRS on many occasions I would love to just go up to them and show them the section you found and point out how the language in 990-T contradicts the Code. Can't wait......
The Facts Are In - MLPs Work Great In IRAs [View article]
So you conclude that the PLAIN LANGUAGE in the instructions saying it is taxed isn't correct.
Of course the cap gain part isn't taxed, we're talking about the 1245 part and the 990-T couldn't be any simpler in its explanation.
Gee, I was expecting "I'm not a CPA, or something like that.
This is extra-terrestrial.
MLPs - A Reality Check ? [View article]
751 is just a two sentence statement (you can google for it) that says you have reported the ordinary income portion in accordance with the Code and the MLP has records that correspond to your reporting.
751 as no numbers. It just like the "I sign this form under penalties of perjury.