(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—
net investment income for such taxable year, or
(B) the excess (if any) of—
the modified adjusted gross income for such taxable year, over
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—
the undistributed net investment income for such taxable year, or
(B) the excess (if any) of—
the adjusted gross income (as defined in section 67(e)) for such taxable year, over
(b) Threshold amountFor purposes of this chapter, the term “threshold amount” means—
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,
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
(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—
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),
(2) Trades and businesses to which tax appliesA trade or business is described in this paragraph if such trade or business is—
a passive activity (within the meaning of section 469) with respect to the taxpayer, or
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 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 corporationsIn the case of a disposition of an interest in a partnership or S corporation—
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
(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 401(a), 403(a), 403(b), 408, 408A, or 457(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—
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—
(Added Pub. L. 111–152, title I, § 1402(a)(1), Mar. 30, 2010, 124 Stat. 1061.)