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To: Madharry who wrote (35131)	8/15/2009 2:42:53 PM
From: Spekulatius	1 Recommendation Respond to of 78751

You need to consider UBTI (unrelated business income) when holding MLP's in an IRA. if the sum of your UBTI exceed 1000$ in an given year, there are going to be some problems. Most MLP produce negative UBTI though but there could be situations (hedging gains, sale or reorganization of business) where the UBTI becomes positive. So my answer would be that you shouldn't hold too much MLP's in an IRA to keep under the 1K UBTI threshold, maybe 20k should be OK in all but the most strange circumstances. Also to consider is that BWP for example cannot be hold in and Roth IRA account because of some weird tax rules related to FERC regulated pipelines (that only BWP seems to enforce). If you do buy BWP in a Roth, it would not pay a distribution. Investorvillage "Mlps" thread is the best source for UBTI/tax related discussions.

To: Madharry who wrote (35131)	8/15/2009 5:06:26 PM
From: Paul Senior	1 Recommendation Read Replies (1) \| Respond to of 78751

You don't file a k-1 if the mlp is in an ira if UBTI is $1000 or less. Building on what Spekulatius says, you don't want the dreaded UBTI to exceed $1000 though or you WILL have some kind of paperwork to complete (it may include the k-1 -- I don't know) and conversations with whomever holds your ira, and taxes to pay. I believe that the $1000 is cumulative UBTI for the tax year. So if you have more than one mlp in an ira it's the sum of the UBTI for all of them that shouldn't go over the $1000 threshold. So far, in my limited experience with oil/gas mlp's, Spekulatius's opinion is more correct than my apprehension about having these things in an ira. UBTI is not just the cash distributions one receives but apparently a calculation which, in my limited experience is indeed small or negative for the oil/gas mlp's I have (as Spekulatius finds also.) It's just that the amounts seem to vary for each person depending on when they bought and how much they bought, when they sold, which mlp's they bought, etc. so I keep my mlp's in the ira very small so I don't get surprised with a k-1 with a large UBTI amount. Now if you go big with mlp's in a taxable account, and you've got something like a pipeline that crosses states (and some of these pipeline mlp's cross MANY states), you could fall into the category where these states have laws which say you are required to file state income taxes. I don't seem to have amounts large enough to fall in that category -whew. This of course, all jmo and my experience. I'm no accountant or tax lawyer. Fwiw: as I have posted here before, my preferred way to play oil/gas mlp's in an ira is through etf's that specialize in lp's. The positive is that there are no k-1's issued to me, so no UBTI. ----- Edit: I should maybe be less opinionated here. This not wanting to have UBTI over $1000 might be wrong if somebody actually does the numbers. I have heard of somebody saying, it's not really a big deal hassle if the UBTI DOES go over $1000: The ira manager/holder/ or whatever the term is (Fidelity/Schwab) fills out a form and apparently (?) pulls some money from the ira to pay the tax. From this person's experience it may be worth it financially to keep these mlp's in the ira and go ahead a pay taxes if necessary. Just hearsay. I don't have enough facts to know.