U.S. Code
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Title 26
» Subtitle Subtitle A— Income Taxes › Chapter CHAPTER 2A— UNEARNED INCOME MEDICARE CONTRIBUTION
26 U.S.C. § 1411
Imposition of tax
(a) In generalExcept as provided in subsection (e)—(1) Application to individualsIn the case of an individual, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax equal to 3.8 percent of the lesser of—(A) net investment income for such taxable year, or(B) the excess (if any) of—(i) the modified adjusted gross income for such taxable year, over(ii) the threshold amount.(2) Application to estates and trustsIn the case of an estate or trust, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax of 3.8 percent of the lesser of—(A) the undistributed net investment income for such taxable year, or(B) the excess (if any) of—(i) the adjusted gross income (as defined in section 67(e)) for such taxable year, over(ii) the dollar amount at which the highest tax bracket in section 1(e) begins for such taxable year.(b) Threshold amountFor purposes of this chapter, the term “threshold amount” means—(1) in the case of a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), $250,000,(2) in the case of a married taxpayer (as defined in section 7703) filing a separate return, ½ of the dollar amount determined under paragraph (1), and(3) in any other case, $200,000.(c) Net investment incomeFor purposes of this chapter—(1) In generalThe term “net investment income” means the excess (if any) of—(A) the sum of—(i) gross income from interest, dividends, annuities, royalties, and rents, other than such income which is derived in the ordinary course of a trade or business not described in paragraph (2),(ii) other gross income derived from a trade or business described in paragraph (2), and(iii) net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in a trade or business not described in paragraph (2), over(B) the deductions allowed by this subtitle which are properly allocable to such gross income or net gain.(2) Trades and businesses to which tax appliesA trade or business is described in this paragraph if such trade or business is—(A) a passive activity (within the meaning of section 469) with respect to the taxpayer, or(B) a trade or business of trading in financial instruments or commodities (as defined in section 475(e)(2)).(3) Income on investment of working capital subject to taxA rule similar to the rule of section 469(e)(1)(B) shall apply for purposes of this subsection.
(4) Exception for certain active interests in partnerships and S corporationsIn the case of a disposition of an interest in a partnership or S corporation—(A) gain from such disposition shall be taken into account under clause (iii) of paragraph (1)(A) only to the extent of the net gain which would be so taken into account by the transferor if all property of the partnership or S corporation were sold for fair market value immediately before the disposition of such interest, and(B) a rule similar to the rule of subparagraph (A) shall apply to a loss from such disposition.(5) Exception for distributions from qualified plansThe term “net investment income” shall not include any distribution from a plan or arrangement described in section 401(a), 403(a), 403(b), 408, 408A, or 457(b).
(6) Special ruleNet investment income shall not include any item taken into account in determining self-employment income for such taxable year on which a tax is imposed by section 1401(b).
(d) Modified adjusted gross incomeFor purposes of this chapter, the term “modified adjusted gross income” means adjusted gross income increased by the excess of—(1) the amount excluded from gross income under section 911(a)(1), over(2) the amount of any deductions (taken into account in computing adjusted gross income) or exclusions disallowed under section 911(d)(6) with respect to the amounts described in paragraph (1).(e) Nonapplication of sectionThis section shall not apply to—(1) a nonresident alien, or(2) a trust all of the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B).(Added Pub. L. 111–152, title I, § 1402(a)(1), Mar. 30, 2010, 124 Stat. 1061.)Statutory Notes and Related SubsidiariesEffective DatePub. L. 111–152, title I, § 1402(a)(4), Mar. 30, 2010, 124 Stat. 1063, provided that: “The amendments made by this subsection [enacting this chapter and amending section 6654 of this title] shall apply to taxable years beginning after December 31, 2012.”
Notes of Decisions
Senty, James v. United States (W.D. Wis. 2023).
· cites it 3× “8% NIIT on certain of their net investment income under 26 U.S.C. § 1411 . In August 2021, the Sentys paid this NIIT under protest in the amounts of $101,097 for 2014 and $105,354 for 2015.”
Bruyea v. United States (Fed. Cl. 2024).
· cites it 3× “” It contains but a single provision: 26 U.S.C. § 1411 (“Imposition of tax”). That tax provision imposes an income tax on individuals as follows: (1) Application to individuals.”
Isaac v. Comm'r, 2017 T.C. Summary Opinion 55 (Tax Ct. 2017).
“Petitioner conceded the adjustments set forth in the notice of deficiency as follows: (1) inclusion of a taxable State income tax refund of $2,969; (2) adjustment to itemized deductions of $59; (3) alternative minimum tax (AMT) of $15,308; and (4) net investment income tax of…”
Nathan Owen v. Lynn Cannon (Del. Ch. 2015).
“275 See 26 U.S.C. § 1411 . 276 I also accept Austin Smith‘s assumption that Nate‘s state taxes are effectively not deductible for federal tax purposes.”
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