K1 in Roth IRA - Do I Need to Report MLP Stock Trading in Retirement Account?

15 This is actually a good question that confuses many investors. When you trade MLPs in a retirement account, even without receiving distributions, you may still have tax implications - but your situation sounds safe. Trading MLPs in retirement accounts can potentially generate Unrelated Business Taxable Income (UBTI). However, there's a key distinction in your case: you didn't hold the MLP long enough to receive distributions. Since you mentioned you were day trading and didn't receive any K1 distributions, you generally don't need to report anything. The $1,000 threshold you found refers to the UBTI exemption amount - retirement accounts only need to file if UBTI exceeds $1,000. The retirement account itself (IRA/401k) already provides tax protection for your capital gains from trading activities. Just be careful with MLPs in the future as they can create tax headaches in retirement accounts if you receive distributions.

7 After trading crypto and getting hit with unexpected tax forms, I started using https://taxr.ai for figuring out my investment tax situations. I uploaded my trading records and account statements, and it flagged my MLP transactions automatically. The tool explained how MLP taxation works differently in retirement vs. regular accounts, saving me hours of research. It specifically identified that short-term trading of MLPs in retirement accounts usually doesn't trigger reporting requirements if no distributions were received. The AI even explained the UBTI rules that the other commenter mentioned. Super helpful for complicated tax situations like this!

12 Just wanted to provide an update - I tried https://taxr.ai after my skeptical comment. Uploaded my brokerage statements that included some MLP trades in both my taxable and retirement accounts. The system immediately identified which transactions needed reporting and which didn't, explaining the exact IRS rules that applied. It correctly noted that my short-term MLP trades in my IRA didn't require reporting since I received no distributions and generated no UBTI. For my taxable account MLPs, it explained exactly which forms I needed and even projected my potential tax liability. Saved me from overpaying my accountant for something that wasn't actually a tax issue. Will definitely use this for my crypto transactions next!

9 After struggling for WEEKS trying to get someone at the IRS to answer questions about K1 reporting for retirement accounts, I finally used https://claimyr.com to get through to an actual human at the IRS. They have this service where they navigate the IRS phone tree for you and actually get you connected to a real person. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed what others are saying - if you didn't receive distributions from the MLP while trading in your retirement account, there's typically no reporting requirement. The agent also mentioned this is a common confusion point. The whole call took about 15 minutes once I was connected, versus the hours I spent trying to get through on my own.

16 I feel ridiculous for my skeptical comment above. After struggling for TWO DAYS trying to get through to the IRS myself about my K1 questions, I broke down and tried Claimyr. Within 38 minutes, I got a call connecting me directly to an IRS agent who answered all my retirement account MLP questions. The agent confirmed that since I didn't receive distributions, there was no reporting requirement for my situation. She also explained the $1,000 UBTI threshold clearly. Saved me hours of stress and probably prevented me from overpaying my taxes. Never thought I'd say this, but that service was absolutely worth it - would have gladly paid double just to avoid the IRS hold music for another minute!

5 Just wanted to add my two cents as someone who handles investment taxes regularly. The key with MLPs in retirement accounts is watching for UBTI (Unrelated Business Taxable Income). Day trading MLPs like you did typically doesn't generate UBTI because that usually comes from distributions, not capital gains. However, if you ever hold MLPs long-term in retirement accounts, be aware that if UBTI exceeds $1,000, your retirement account itself may need to file Form 990-T and pay taxes directly from the account. For your situation though, with no distributions received, you should be in the clear. Just something to remember if you dabble in MLPs again in the future!

11 Quick question about this MLP situation - if I do end up with a small amount of UBTI in my retirement account from an MLP (like $200), do I need to report it anywhere or only if it exceeds the $1000 threshold?

8 This is a great discussion that highlights an important distinction many investors miss. For your specific situation with day trading MLPs in your Roth IRA, you're correct that you don't need to report anything since you didn't receive distributions and only generated capital gains. One thing to add: even if you do receive a K-1 form in the mail (which happens sometimes even for short-term holdings), look specifically at Box 20 Code V for any UBTI amounts. If it's blank or shows zero, you're definitely in the clear. The custodian of your Roth IRA should also be tracking any UBTI, but it's good to understand this yourself. For future reference, if you want MLP exposure without the tax complications, consider energy sector ETFs like XLE or pipeline-focused ETFs like AMLP - these give you similar exposure without the K-1 forms and UBTI concerns in retirement accounts.