Net Investment Income

News & Analysis as of

Are Passive Foreign Investments Too Good to Be True?

“Invest in tax-free offshore funds!” Sounds great, right? Each year, many U.S. investors fall for these familiar sales pitches. Other investors are simply looking to diversify risk by investing in offshore...more

In Frank Aragona Trust, Tax Court Holds that Trustees’ Activities as Employees Count for Purposes of Material Participation Under...

The issue of whether a trust has passive or non-passive income from its investment in a pass-through entity has taken on increased importance in light of the tax imposed on net investment income under Code Section 1411 of the...more

Participation of 100 Hours May Be Sufficient to Generate Active Income Exempt from the 3.8 Percent Health Care Tax on Net...

As business owners begin filing their 2013 federal income tax returns and pay the 3.8 percent tax on net investment income for the first time, they should be aware that 100 hours of participation in an activity may be...more

U.S.Tax Court Decision May Allieviate The 3.8% Net Investment Income Tax Burden For Many Trusts

Because trusts are subject to the 3.8% Net Investment Income Tax at a very low income level, $12,150 for 2014, trustees of trusts owning interests in operating entities have been considering ways to meet the material...more

Camp Goes All-In with Comprehensive Tax Plan: Highlights, Tax Reform Status and Impact on Taxpayers

On February 26, Representative Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, released his much-awaited comprehensive tax reform plan (the “Camp Proposal”). That proposal seeks to cut marginal tax rates...more

IRS Changes Course And Provides Safe Harbor For "Real Estate Professionals" In Net Investment Tax Final Regulations

Section 1411 of the Patient Protection and Affordable Care Act (the "ACA") levies a new 3.8% tax on "net investment income" (the "NII Tax"). Among other things, the net investment income subject to the NII Tax includes...more

Credit for Foreign Taxes Paid Not Available Against New 3.8% Net Investment Income Tax

Previously, many U.S. citizens living abroad eliminated their U.S. income tax liabilities with a credit for foreign taxes paid; however, individuals who are subject to the new 3.8 percent net investment income tax (NIIT) may...more

FBAR and Form 8938 Assistance Provided by Treasury

There are a multitude of information returns that United States taxpayers may need to file if they own foreign assets or have foreign investments. Two of these forms are the FBAR (Foreign Bank Account Report) and Form 8938...more

MoFo New York Tax Insights - Volume 6, No. 4 - January 2014

In This Issue: FATCA Developments: Treasury Signs IGAs; IRS Finalizes FFI Agreement; IRS Releases Final and New Proposed “Dividend Equivalent” Regs; IRS Issues Final Swap Assignment Regs; IRS Issues Final “Net...more

Winthrop & Weinstine Summary of Revenue Procedure 2014-12

Scope of the Guidance & General Information - 1. Application of the Guidance is limited to allocations of HTC from Buildings that are placed in service on or after December 30, 2013. 2. This means the Guidance...more

"The Estate Planner" – January/February 2014

In this issue: - Planning For The Net Investment Income Tax - The Stretch IRA: A Simple Yet Powerful Estate Planning Tool - Do You Know How To Address IP In Your Estate Plan? - Estate Planning Red...more

IRS: No FTC For 3.8 Percent NIIT

No significant US tax changes are set to take effect in 2014; in contrast to last year, taxpayers are not standing on the edge of a fiscal cliff. Recently, however, the IRS released final Treasury regulations (TD 9644,...more

The New 3.8-Percent Tax Applies To Trusts And Estates

As we noted in a prior Estate Planning Update, 2013 brought with it a new 3.8-percent Medicare Contribution Tax on net investment income (interest, dividends, annuities, royalties, rents, capital gains, and passive activity...more

Sweeping Changes to the Pennsylvania Tax Code - The Passage of Pa. House Bill 465

House Bill 465, also known as Act 52, was signed into law by Pennsylvania Governor Tom Corbett on July 9, 2013. The Bill makes substantial changes to the Pennsylvania tax code as an integral part of the 2013–2014 budget....more

3.8% Medicare Tax on Net Investment Income

Beginning in 2013, Section 1411 of the Internal Revenue Code imposes a 3.8% “net investment income tax” (“NIIT”) on the net investment income (a specifically defined term) of individuals, estate and trusts that have income...more

Insight on Estate Planning - August/September 2013: Estate Planning Pitfall - You haven’t reviewed your trusts this year

If an estate plan includes one or more trusts, it’s a good idea to review them in light of recent tax law changes. Higher income taxes — on individuals as well as trusts — may make it advisable to rethink the way the trusts...more

New Tax Increases Make Deferral of Compensation a (More) Valuable Benefit for Many Employees

This article describes how the new additional Medicare tax, tax on net investment income, higher marginal tax rates, and phase-out and reductions of personal exemptions and itemized deductions make the use of compensation...more

Insight on Estate Planning - June/July 2013: New 3.8% Medicare contribution tax - Do you know how to reduce or eliminate your...

One of the funding mechanisms for health care reform is a new 3.8% Medicare contribution tax on net investment income (NII) going into effect this year. The tax applies to higher-income individuals as well as to trusts and...more

Planning Your Estate

The basic goals of estate planning are to dispose of your property in accordance with your wishes and to avoid unnecessary taxes and expenses....more

N.Y. ALJ Holds Taxpayer’s Motives for Acquiring Stock and How Stock Is Used Irrelevant in Determining Investment Capital

A New York administrative law judge recently held in Matter of C.V. Starr & Co., Inc. that income received by a taxpayer from its ownership of common stock was investment income. In so holding, the ALJ addressed an important...more

The Health Care and Education Reconciliation Act’s Tax on Net Investment Income

One of the provisions included in the health care reform legislation enacted in 2010 will subject certain individuals to a 3.8% tax on net investment income (or "unearned income"). The new law is effective in 2013 and imposes...more

Planning For The Affordable Care Act's Net Investment Income Tax

The new Internal Revenue Code ("IRC") Section 1411, which imposes a 3.8 percent tax on net investment income ("NII") was passed as part of the Affordable Care Act of 2010 ("ACA") and is effective for tax years beginning on or...more

Sutherland SALT Shaker: April 2013 Digest

In this issue: - California Court of Appeal: No Man May Profit From His Own Wrongdoing in a Court of Justice - The (True) Object of My Affection: A Nontaxable Stock Screening Service - Alternate Universe...more

A Compilation of Enforcement and Non-Enforcement Actions - March 29, 2013

Non-Enforcement Matters: - Recent Newsworthy Remarks by the SEC - SEC Issues “Alert” on the Custody Rule - Securities Exchange Act Issues for Exchange-Traded Funds - Mutual Funds’ After-Tax Returns...more

Application of the Self-Employment Tax and 3.8% Net Investment Income Tax to Fund Managers

With the imposition of a new 3.8% “net investment income tax” (the “NIIT”) pursuant to Section 1411 of the Internal Revenue Code of 1986, as amended (the “Code”) on passive income and the imposition of an additional .9% on...more

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