I am losing 5,800 to UBTI, a term which is completely new to me. I am a member of a stock club, and 20 yrs ago I bought EPD, which is a limited partnership. All I knew about LP is that is better tax wise to keep it in a retirement account, and it made good interest. I decided due to having special tax form complications, i sold 355 shares in 2024. I received a notice from my brokerage that it triggered a UBTI, and my brokerage will take 5,800 from my IRA to pay taxes on my partnership, as having the stock makes me a “partner”, and the company has debt, to my understanding.
I would love to be able to reverse or fix this, but the brokerage is sending a form to IRS, and I am losing all of the appreciation that I made, which i paid taxes on last year.
Can I use this as a loss in 2025, since that is when broker will remove the amount from my IRA?
Just a guess because I looked it up…
What Is Unrelated Business Taxable Income (UBTI)?
Unrelated Business Taxable Income (UBTI) is the income earned by a tax-exempt entity from activities that are not related to its exempt purpose. The Internal Revenue Service (IRS) defines UBTI as “income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization’s exemption.”