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What is the purpose of Form 990-T?

Posted on: December 10, 2019

IRA accountholders are responsible to file Form 990-T if their IRA investments generate UBIT (Unrelated Business Income Tax) and/or UDFI (Unrelated Debt Financed Income), such as:

When an IRA invests in a business which generates “active income” as defined by the IRS here: https://www.irs.gov/pub/irs-pdf/p598.pdf, then the profits are subject to UBIT (Unrelated Business Income Tax) and the filing of Form 990-T is required.
When an IRA uses leverage to purchase an investment, then the earnings attributable to the leveraged portion are subject to UDFI (Unrelated Debt Financed Income) and the filing of Form 990-T is required.

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