CHARLOTTE, N.C., Dec. 7, 2018 /PRNewswire-PRWeb/ -- Holding a
Self-Directed IRA means that it is possible to hold investments
that are exempt from federal income tax. As a recent post at
American IRA notes, the Internal Revenue Code exempts most forms of
investment income generated within a Self-Directed IRA. For
example, dividends, loan interest, annuities, rental income from
real estate, and gains from the sale of stocks or real estate all
fall under the umbrella of tax exemption in this situation.
But there may be cases in which Self-Directed IRA holders need
to pay special attention—there is a UBTI, or a tax on unrelated
income, that can result when holding assets within a Self-Directed
IRA. In American IRA's recent post, it went through the types of
situations that may trigger this UBTI.
For instance, UBTI would be defined as gross income regularly
generated by a tax-exempt entity via a taxable activity unrelated
to that entity's main function. For instance, if a Self-Directed
IRA owns a large manufacturing company, income is exempt if all
activities within the company are related to manufacturing. But if
the company generates additional income such as leasing some
equipment to other businesses, that lease income would then
generate UBTI.
Two factors potentially trigger UBTI rules—whether the activity
attains the level of a trade or business, and whether that activity
is regularly carried on. The article further detailed other
examples of activities that the IRS could deem to rise to the level
of "active business" that is regularly carried on, and therefore
potentially subject to UTBI rules.
"These tax issues can get quite complicated," said Jim Hitt, CEO of American IRA. "That is why we
like to put out informational posts that help fill the information
gap. Self-Directed IRA owners have a lot of homework as a result of
their increased freedom, which is why it is so imperative that they
work with a valid Self-Directed IRA administration firm."
For more information on the UBTI rules and how a Self-Directed
IRA investment might generate taxable unrelated income, visit the
post at http://www.AmericanIRA.com or call American IRA at
866-7500-IRA.
About:
American IRA, LLC was established in 2004 by Jim Hitt, CEO in Asheville, NC.
The mission of American IRA is to provide the highest level of
customer service in the self-directed retirement industry.
Jim Hitt and his team have grown the
company to over $400 million in
assets under administration by educating the public that their
Self-Directed IRA account can invest in a variety of assets such as
real estate, private lending, limited liability companies, precious
metals and much more.
As a Self-Directed IRA administrator, they are a neutral third
party. They do not make any recommendations to any person or entity
associated with investments of any type (including financial
representatives, investment promoters or companies, or employees,
agents or representatives associated with these firms). They are
not responsible for and are not bound by any statements,
representations, warranties or agreements made by any such person
or entity and do not provide any recommendation on the quality
profitability or reputability of any investment, individual or
company. The term "they" refers to American IRA, located in
Asheville and Charlotte, NC.
SOURCE American IRA, LLC