April 9, 2014

Thomson Reuters Checkpoint Releases Special Report for Tax Preparers on the Net Investment Income Tax (NIIT)

NEW YORK – Thomson Reuters has released a special report focused on the 3.8 percent surtax on the net investment income tax (NIIT), which tax preparers will be calculating for the first time on 2013 returns.

The report explains key differences in the updated rules, the steps to calculating the NIIT, and various business and investment scenarios that may be affected by this tax. The report can help accountants determine which set of regulations to follow when preparing 2013 returns for affected clients.

“For 2013 returns, it is critical that tax professionals understand the complex changes presented by the NIIT so they can continue to serve in their clients’ best interests,” said Robin Christian, tax analyst at Thomson Reuters. “The report clearly and comprehensively answers fundamental questions including who owes, what income is included, and what is exempt under these new regulations.”

The special report provides Thomson Reuters insights on the new tax, including:

  • Clarifications of the types of retirement plan distributions that are exempt from NIIT.
  • Information about several favorable provisions that may allow real estate professionals to treat income earned through their profession as non-passive business income exempt from the NIIT.
  • Guidance regarding the simplified process for determining how much of the gain or loss from partnership or S corporation interest disposition is considered held in a non-passive business activity and, thus, may escape the NIIT.
  • Explanation of NOL deduction changes: whereas 2012 proposed regulations explicitly prohibited net operation loss (NOL) deductions to be taken into account in determining net investment income, final NIIT regulations potentially allow a portion of the taxpayer’s NOL to reduce net investment income.

The report is an example of the practical, insightful information available on Thomson Reuters Checkpoint, which provides research, news, analysis and productivity tools to tax, audit, accounting, legal, trade and finance professionals.

Thomson Reuters

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