Quote:
Originally Posted by GregWeld
Since we're talking about 401's.... (not ROTHS here)
Some of the stocks we've been discussing are "tricky". Master Limited Partnerships (Kinder Morgan Partners - KMP) is one of these...
Although you can technically hold MLP units in an IRA and other tax-exempt investment vehicles, don’t do it.
Placing investments that are already tax-advantaged in a tax-sheltered account isn’t the most efficient allocation of resources; hold MLP units in brokerage accounts and keep your IRAs and 401(k) plans for more traditional fare.
MLP's pass thru80 to 90% of their "income" to the unit holder (share holder) and as such are not taxed (Federally) so the unit holder is the partner that gets hit with the tax... There are rules about this and income levels etc -- so if you get a sizable dividend from MLPS you should discuss this with a CPA...
You're not taxed on this until the "return of capital" (which is what it is - it's not a "dividend" is above you cost basis)... So let's say you have $10,000 worth of "units" -- you'll have no tax until you've gotten $10,000 in "dividends"... There are other rules - but just be aware of them if you're buying bigger amounts because they can affect your income tax return.
I own an apartment complex inside an IRA... and I have to file an income tax and pay a tax on it each year even though it's inside the IRA -- because it get hit with UBIT (Unrelated Business Income Tax)... It's not a big tax but still costs me to have the paperwork done and I have to have the IRA pay the tax etc - so it's a hassle. I wanted to BUY the investment out of the IRA --- in other words I'd pay the IRA the amount of the investment and take it out of there -- but that would cause even more tax issues. UGH!
|
Wow... Great info as usual... You sound like your own CPA... I do have a CPA and we discuss this, and my assets are in the right place, But this helps me understand it more. I have more studying to do.
Do you think that a pop quiz sometime would sharpen the troops minds ??
I am not saying that even I could pass it, but it may be a fun way to shake us up..Just a thought.
But again, you money crazy man, thanks for all your tips..
I always hated discussing taxes and Money....That is why I never had any money. I learned that I needed to learn this stuff to secure MY future.
Thanks for the tax tips.