| From: Elroy | 10/10/2023 8:27:50 AM | | | | | | I've still got a small chunk of UAN which is exposed to short Nov covered calls at $80 and $85. Naturally, UAN's unit price has been sitting at about $82 for months!
I may still own this guy depending on how these covered calls progress. Oddly, I'm rooting for bad news for the Q3 results, hopefully pushing the price below $80 on Nov expiration, and good news thereafter....
And to make it more interesting, these UAN units are in my Roth account. I've been trying to get answers from my brokerage about what happens if I turn 59 1/2, and then transfer them out of the Roth into a regular account. The question is whether that transfer will be scored for tax purposes as a sale in the Roth and repurchase at the same price in the regular account (which would trigger UBTI in the Roth), or whether it will be treated as a transfer in kind from the Roth to the regular account (which means no sale in the Roth, and no UBTI triggered by selling units in the Roth). I await their response...... |
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| To: Elroy who wrote (796) | 12/21/2023 11:28:43 PM | | From: Area51 | | | | Did you ever get an answer to your question (circumvent tax by transferring shares out)? Or did Privately convince you that K-1 capital gains won't be taxed? I like what he says and what he says makes more sense to me than what the accountants did with my form 990-T, but I just pulled out my 990-T for my sale in 2021 and it is clear as day that they taxed the capital gain (they specifically attached a form 8949). You had a good comment (since deleted?), about why wouldn't they tax a capital gain in something like CCL similarly. I guess the only reason they don't is they only review it for companies that file K-1? Still it makes no sense to me. But change what you can control and accept the rest I suppose.
I actually have been buying some UAN lately (got some higher, some near the lows and some today). I think 2024 may see the dividend back near $20 per share, and the unit price back over $100. We shall see.
Best Regards,
A51 |
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| To: Area51 who wrote (797) | 12/22/2023 12:13:43 AM | | From: Elroy | | | | 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 | | | | 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 | | | | 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 | | | | 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: Elroy who wrote (802) | 2/5/2024 1:05:59 PM | | From: Area51 | | | | 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 | | | | 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 | | | | | 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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