Here are the IRA Investing Answers!

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1) D. Beneficiary   A beneficiary can be an individual, company, organization, etc.

2) D. All the above

3) E.  Both B & C.   The IRA is established for the exclusive benefit of the individual, so no “self-dealing” or dealing with disqualified individual members of your family. (See page 2 for more information.)

4) C—Asset Allocation

5) A—1031 Exchange  The transaction is governed pursuant to Section 1031 of the Internal Revenue Code and Section 1.1031 of the Treasury Regulations in order to defer Federal, and in most cases state, capital gain and depreciation recapture taxes.

6) C—Unrelated Business Income Tax  For most organizations, a business activity generates unrelated business income subject to taxation if all of the following are true:

  1. Income is derived from “trade or business” activity (i.e., sale of goods and services).
  2. Business activity is not substantially related to exempt status.
  3. Business is regularly carried on by organization.

Generally, IRA investments that can generate UBIT include:

  • Limited Partnerships (LPs),
  • Limited Liability Companies (LLCs), and
  • Any investment that incurs debt financing and/or is involved in an unrelated business
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