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   Non-TechUAN - The variable distribution MLP that could go a long way


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To: Area51 who wrote (797)12/22/2023 12:13:43 AM
From: Elroy
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I've asked my brokerage what will happen if I remove an MLP from a Roth to a regular account. They say the cost basis of the MLP in the regular account will be the value on withdrawal date, and that the withdrawal itself will not be a taxable event. So I'm going to try to do that next year when I turn 59 1/2.

I don't own any UAN in regular accounts, but will own some when I do this transfer out of my Roth. Lately there has been deal action (Koch bought some OCI fertilizer factories that are similar in propductin volume to to UAN's plants, and the comparitive value implies UAN is worth something like $295 per unit. It doesn't make much sense, but that's what the math says.

I think UAN will pay $10-$15 over the next three distributions, and visibility beyond that is nil. Depends on where fertilizer sales price per ton goes, and so far it seems to not be going up despite heading into the high useage season....

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To: Elroy who wrote (798)12/22/2023 12:26:56 AM
From: Area51
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Hopefully that will work (transfer shares out). That might work for an IRA account as well, right? I guess we'll find out in 2025 for Roth anyway.

Just posting this for future reference on UBTI UDFI
iamlookingforincome.blogspot.com

One thing of interest is
Partnership Debt Ratio (Provided by Partnership separately)
seems to me that my form 990-T didn't reduce the capital gain by this factor. Not sure if this is because UAN debt ratio is 1.0, or if they just conservatively assumed that it is 1.0 because the partnership doesn't provide a value.

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To: Area51 who wrote (799)12/22/2023 10:42:53 AM
From: Elroy
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If you remind me post Dec 28 I'll look into what my 990T said last year, I've got family here and no time to go through papers.

Anything that reduces tax payments is fine with me!

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To: Elroy who wrote (800)2/2/2024 11:39:24 PM
From: Area51
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I would still be interested if you can glean a debt-ratio from any UAN 990-T. Also if anyone has a different mlp 990-t and the debt ratio is utilized in the 990-T I would be interested. I kind of think that some partnerships will include the debt ratio in the K-1 and in those cases the capital gain that is taxed on the 990-T will be reduced accordingly. UAN didn't include a debt ratio in the K-1 so the people doing the 990-T default to conservatively (as far as maximizing the tax due) using a debt-ratio of 1.0?

Regarding transferring shares to a taxable account to avoid the capital gains tax:
The link below considers the transfer of shares out of an IRA (see Q51 and Q53) to a taxable account. Seems like an in-kind distribution to me? If so maybe the transfer is not treated as an effective sale of the IRA shares so the capital-gain might escape the UBTI tax?

Q53: What happens if an in-kind distribution of the UBTI generating investment is taken? A53: IRA owners should determine with their external tax advisors whether the investment can and should be distributed from the IRA. The tax liability up until the date of distribution from the IRA will still need to be paid.

faq-ubti.pdf

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To: Area51 who wrote (801)2/3/2024 9:22:03 AM
From: Elroy
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I have a 2022 UAN 990-T.

What do you want to know? Which line item?

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To: Elroy who wrote (802)2/5/2024 1:05:59 PM
From: Area51
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Right I couldn't find where that partnership debt ratio would be entered on the 990-T, so if anyone has a 990-T that credited the partnership debt ratio maybe they could let us know.

On the transfer thing: <<The UAN MLP says if the broker tells them the withdrawal is a transfer, it won't produce UBTI as a result of the transfer>> That seems kind of odd to me:| if they just lift the units from the IRA and put them in the taxable account with the original purchase date, it seems to me that that could effect your taxable income for previous years. I think you should transfer out 10 shares this year and see what really happens.

Best Regards, A51

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To: Area51 who wrote (803)2/5/2024 1:28:17 PM
From: Elroy
1 Recommendation   of 811
 
if they just lift the units from the IRA and put them in the taxable account with the original purchase date.....

I think they lift them out of the Roth IRA, and put them in the taxable account with the transfer date (and transfer date unit price as the cost basis).

That's how regular equities are done when transferred out of a retirement account. They say MLPs will be done using the same method. It seems odd, but what's the alternative?

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To: Elroy who wrote (804)2/5/2024 3:00:54 PM
From: Area51
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Actually that seems like a reasonable approach. I hope that is what they would actually do (and no capital gains tax on the position transferred out). I'd vote for it for sure.

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From: Elroy2/19/2024 6:08:41 PM
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UAN to report after the close on Tuesday. My guess for the distribution is $4.00.

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To: Elroy who wrote (806)2/22/2024 7:19:34 AM
From: RJCogburn64
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$1.68

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