Federal Tax

  • 1.  Net investment income tax

    Bronze Most Valuable Member
    Posted 08-04-2014 05:21 PM
    This message has been cross posted to the following Discussions: NASSAUSUFFOLK and Federal Tax .
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    I have an individual tax payer who is a retired partner of a large NYC law firm.  He continues to receive distributions of 413,700 and a K1 indicating line 1 income of 360,000.  There is no entry under line 14 SE Earnings.

    Is the 360,000 subject to the NIIT? 

    Any help would be appreciated.

    Thanks

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    Thomas Fitzpatrick
    THOMAS G. FITZPATRICK, CPA PC
    Woodbury NY
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  • 2.  RE: Net investment income tax

    Platinum Most Valuable Member
    Posted 08-04-2014 05:38 PM
    Tom:

    As that is a payment on his buyout, I believe it is subject to the net investment income tax.


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    Robert Brown
    ROBERT N. BROWN, CPA
    Jericho NY
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    Original Message


  • 3.  RE: Net investment income tax

    Posted 08-05-2014 09:02 AM
    Based on code sec 469 this is not considered passive income, therefore I would treat it as ordinary income not subject to Net Investment Income Tax.  I have nothing to backup my opinion except reliance on other sections of the code. Another way to verify my opinion is you can not use the K-1 income as investment income to use as an offset to investment interest expense, therefore I would not consider it as investment income.

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    Ronald Tockman
    RONALD C. TOCKMAN, CPA
    Stoughton MA
    781-344-8778
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    Original Message


  • 4.  RE: Net investment income tax

    Platinum Most Valuable Member
    Posted 08-05-2014 09:16 PM
    As the partner is not in the active conduct of a trade or business, the tax would apply. Take a look at 1411(c)(2). ------------------------------------------- Robert Brown ROBERT N. BROWN, CPA Jericho NY -------------------------------------------
    Original Message


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The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.