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What is the UBTI tax rate?

UBTI Tax

Internal Revenue Code Section 511 taxes “unrelated business taxable income” (UBTI) at the rates applicable to corporations or trusts, depending on the organization’s legal characteristics. Generally, UBTI tax is gross income from an organization’s unrelated trades or businesses, less deductions for business expenses, losses, depreciation, and similar items directly connected therewith.

New Tax Law Helps Minimize Impact Of UBTI Tax For Self-Directed IRA Investors

A Self-Directed IRA is taxed at the trust tax rate because an IRA is considered a trust. For 2019, a Solo 401(k) Plan is taxed at the following rates:

  • $0 – $2,550 = 10% of taxable income
  • $2,551 – $9,150 = $255 + 24% of the amount over $2,550
  • $9,151 – $12,500 = $1,839 + 35% of the amount over $9,150
  • $12,501 + = $3,011.50 + 37% of the amount over $12,500
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