Qualified Opportunity Fund and Net Investment Income Tax

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  • #1705
    wanttoknow
    Participant

    If one invests capital gain in a Qualified Opportunity Fund, thus deferring the Form 1040 tax on the prior capital gain, and that prior capital gain is also subject to the Net Investment Income Tax, can the Net Investment Income Tax also be deferred?

    #1706
    kaneohe
    Participant

    I don’t know the answer to your question but wonder if a different approach might help. Is your NIIT determined by your net investment income or the amount of AGI exceeding the threshold? I would guess
    that for most folks, it would be determined by the latter unless you have tons of ordinary income. If it is determine by the AGI excess, then perhaps you don’t really need to know your NII precisely to calculate NIIT?

    #1708
    wanttoknow
    Participant

    Thanks, Kaneohe. My NIIT is determined by my NII.

    #1709
    kaneohe
    Participant

    Wonder if you can get a hint by just mechanically following F8960 and instructions for cap gains…….on one line it says to enter line 13 of
    the 1040. If you are going leave something off line 13, sounds like it
    wouldn’t end up on the 8960? Other adjustments are to exclude gains.
    Might have missed it but I don’t see a line to add additional gains.

    #1711
    wanttoknow
    Participant

    Excellent idea, kaneohe! I looked, and you are right. Thanks!

    #1713
    Kaye Thomas
    Moderator

    When all else fails, read the instructions. From page 6 of the instructions for Form 8960:

    Gains and losses that aren’t taken into account in computing taxable income aren’t taken into account in computing net investment income.

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