How to tell if what’s in a K-1 is UBIT and you must do a 990-T?
I (my SDIRA) received a K-1 with “current year increase” of $2,749. This is for a real estate syndication. I was not expecting to be hit with UBIT until the end of this partnership, when equity is to be liquidated. For now, it’s supposed to be all interest. But my CPA says that I have to do a 990-T. Could he be correct?
Part II of 1065:
G: Shows me as a “limited partner...”
H: “Domestic partner.”
I1: "IRA"
I2: Checked as a “retirement plan.”
J: All same from beginning to ending.
L: Shows the “current year increase” of $2,749; “tax basis” is checked.
M: “No” is checked.
Part III:
1. $2,749 income.
5. $13 in interest income.
20. “A”; $13
20. “Z”; $2,736
(no other box in Part III is used.)
Supplemental information for the 1065 states:
“CLASSIFICATION OF INCOME AS PASSIVE OR NON PASSIVE AS IT APPLIES TO THE IRC SEC. 1411 NET INVESTMENT INCOME TAX MUST BE DETERMINED FOR EACH INDIVIDUAL PARTNER. PLEASE CONTACT YOUR TAX ADVISOR FOR ASSISTANCE WITH THIS CLASSIFICATION.”
Of potential additional interest may be a note in Form 568:
“LINE 20C - COLUMN D
OTHER INFORMATION
PROPORTIONATE INT. OF AGGREGATE GROSS RECEIPTS..............................$ 24,708.
TOTAL $ 24,708.”
Any professional help is appreciated.