In 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 trusts
In 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 amount
For 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)in the case of a married taxpayer (as defined in section
7703) filing a separate return, 1/2 of the dollar amount determined under paragraph (1), and
(3)in any other case, $200,000.
(c) Net investment income
For purposes of this chapter—
(1) In general
The 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 applies
A 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
(3) Income on investment of working capital subject to tax
A 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 corporations
In 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 plans
The term “net investment income” shall not include any distribution from a plan or arrangement described in section
(6) Special rule
Net 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
(d) Modified adjusted gross income
For 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
(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 section
This 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
Pub. 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.”
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.
Description of Change
Statutes at Large
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