UBTI

Unrelated business taxable income (UBTI) is income brought in by a tax-exempt company – like a master limited partnership (MLP) – via taxable ventures that can be passed on to investors as part of its distributions. If investors earn $1,000 or more in UBTI and the UBTI-generating investments are held in tax-deferred accounts, they may have to pay taxes and penalties on the income. This is why we often encourage investors to keep MLPs in taxable accounts.