View Full Version : ProShares in IRA = UBTI Taxes ?

04-03-2011, 03:13 PM
Does anyone have experience with holding ProShares in their IRA? :confused:

I bought some shares of AGQ in my IRA last year. Last week, they sent me a tax form with pretty clear instructions on how to pay the UBTI taxes for it on my income taxes this year.

After a little research on Google, I think the following is true:

1. This UBTI is a result of the way ProShares is formed as a business - it doesn't apply to other PM investments.

2. The UBTI taxes are actually supposed to come out of my IRA via the custodian. I'm guessing the ProShares instructions were generic for non-IRA accounts.

3. The IRS has said (in the instructions for form p598.pdf) that UBTI does apply to IRAs.

4. Most articles on this topic have said that the IRS has not historically sought to collect UBTI on IRAs.... but they could (because of #2 above), and it becomes increasingly attractive as a way to boost depressed tax revenues.

5. I should be more cynical - at least enough to guess that the government would find a way to tax a tax deferred account.

Any info on how others have handled this would be greatly appreciated!!!

04-05-2011, 03:22 AM

Would have guessed being in an IRA there would be no tax, not necessarily true.

Your stock broker I'm guessing is the custodian for the IRA("The UBTI taxes are actually supposed to come out of my IRA via the custodian").
They May have the answer for you.