The NGL preferreds are treated as MLPs, and produce a K-1.
However, they do not product any business income. The dividends on the K-1 are Box 4bc "Guaranteed Payment for Capital". Every other K-1 box is blank.
So....I don't think the dividends can produce UBTI.
If you sell the preferreds in a retirement account and have a capital gain, I don't know what happens. Perhaps the capital gain is UBTI, but I sort of doubt it, but I don't know.
I held them last year in a regular account, there was no UBTI. This year I have some in a Roth, but I haven't gotten a K-1 yet. The only way I can imagine it producing UBTI in the Roth is if you have a capital gain and the Roth needs to classify that as UBTI. Whether it does, I don't know.
Even if you have to pay tax on capital gains in the retirement account, it's not a capital gains stock, it's for income. If you sell it immediately after it pays a dividend (when it drops 72 cents) you aren't going to have much capital gain. Par value is $25, so that's sort of a ceiling on cap gain amount. |
