UBIT (Unrelated Business Income Tax) is a tax on tax-exempt entities such as IRAs for income related to trade/business activities. Certain incomes are carved out from taxation (e.g., rental income, interest, dividends). IRA-owned LLCs are typically subject to Unrelated Business Taxable Income (UBIT) if the LLC engages in a transaction that is considered a trade or business. However, there is certain income that is exempt from UBIT, such as rents and dividends (see IRS publication 598), which are not taxable for IRAs. If the IRA investment is leveraged (e.g., purchased using a non-recourse loan), the portion of income received in relation to the amount borrowed may be taxable even if typically exempt, such as with rents.