THE UBIT TRAP: WHEN YOUR IRA ACCIDENTALLY BECOMES A BUSINESS PARTNER
Most IRA investors think “tax-deferred” means the account is shielded from taxes until distributions. Usually ... yes. But if your IRA owns the wrong kind of investment (especially a pass-through business or debt-financed real estate), a quiet tax regime called UBIT can trigger taxes inside the IRA ... often at aggressive rates ... and then you can still get taxed again when you withdraw the money. The goal of this article is simple: help you spot the UBIT landmines before they blow up your returns.
