Hoping to get some information.

I keep reading that it is a bad thing to do.

But is there anyway I could do so and avoid the potential negatives?

I want the stock and want my gains to be tax free if possible.  I don't really care about tax deferral or that the MLP offers that benefit.

ETA: Does existing self employment factor in  to the consideration? What if I were to hold it in a taxedaccount?

Bad idea.

Oddly (IRS rules, go figure), putting a tax advantaged instrument within a tax advantaged account makes it...wait for it...no longer tax advantaged (google UBTI or UBIT).

If nothing else, unlike "normal" investments within a tax advantaged account, you will get a 990T for the distributions...so now what do you do?  Ignore it?  Claim it?

Depending on how your accountant/tax preparer chooses to interpret the rules, the first $1,000 may be excluded.

Besides, there are much better things to do with your $ than MLPs, but hey, it is your $.

Bottomline:  I wouldn't (and don't) do it.

Thanks for the info.

I was hoping that I could stay under the $1,000 UBTI and not have to fool with it.

At what investment level, ie dollars would it make sense to go ahead and make myself deal with K1's in a traditional account?

I want to own a specific stock that is only available as a LP. Some etfs hold it, which is nice, but they include stuff I am not wanting to be holding.

The MLP I am looking into is TGP as I want to get into LNG sector.

That's sort of painting with a broad brush.

There are also plenty ways around the tax reporting issues.

How are you trying to play LNG?

Long Term Plays. I don't really trade in stocks.

So you are playing the hopeful increase in the actual price of LNG or the ability of a company to make nice earnings in the LNG sector?

If you look down in this forum, I've posted about this in the recent past.

In my case, I bought up enough of an MLP where the agrressive distributions well covered the taxes.

Both.

How would dripping a MLP stock impact my basis that I need to track?

Would it be simpler to just have the MLP kick off cash?

I saw your post about UBIT right about the time I started to research these. It saved me a lot of hassle and potential trouble as I had no clue about UBIT, or MLPS really and was just gonna buy one. Sure glad I did not!


Did you have to make a separate tax return for your HSA?

you are going to have to satisfy that partnership (K1) tax bill somehow.

I won't have to this year, I'll be short of the $1000 threshold.  However I'm not sure about next year.  I will be increasing my holdings if the distributions trend well.

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If you're looking to hold MLPs in your IRA, you may want to consider this list:

Navios Maritime Partners LP1099
Teekay Offshore Partners LP1099
Seadrill Partners LLC1099
Capital Products Partners LP1099
Plains GP Holdings 1099
Kinder Morgan Inc1099
Williams Companies Inc1099
EnLink Midstream, LLC1099
Targa Resources Corp1099
Navios Maritime Midstream Partners LP1099
VTTI Energy Partners LP1099
Enbridge Energy Management1099
Tallgrass Energy GP, LP1099
Cheniere Energy Partners LP Holdings LLC1099
Transocean Partners LLC1099
Hoegh LNG Partners1099
Dyngagas LNG Partners LP1099
KNOT Offshore Partners LP1099
Golar LNG Partners LP1099
GasLog Partners LP1099
ONEOK Inc1099
Spectra Energy Corp1099

All companies listed are MLPs or General Partners that have elected to receive a 1099 rather than a K-1. Keep in mind, a number of these holdings are foreign and carry some risk due to their sector and market cap.

What are the advantages of a 1099 vs K1?

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For the purposes of the OPs post: you can hold an MLP that issues a tax form 1099 in your IRA because it will not incur UBTI. Some investors have claimed to have significant MLP holdings in their portfolio and never incurred UBTI. Not a risk I want to take. But more specifically, a K-1 is issued by a partnerships to its owners/partners (unit holders) indicating their share of the partnerships business activity.

1099 (C-Corp) - Dividend: taxed
K-1 (MLP): Distribution or Return of Capital

K-1 issuing companies best held in non-tax sheltered because the distribution/ROC gets preferential tax treatment.
1099 issuing companies best held in tax-sheltered accounts - tax free, keep the whole Div.

MLPs that issue 1099: generally riskier/foreign but also have huge yields and can be held in tax-sheltered account.

Excellent, thank you.

I usually try to buy up MLP's in my HSA, they have great returns and totally tax free until UBTI.  So now I should be able to get my $1000 in tax free distribution and buy the balance in 1099 arrangments.

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With an MLP with K1 form, do I pay any tax each year or just when I sell?

I assume the distributions that comes across as "return of capital" just goes into the income pile?