OUR THOUGHTS ON:

Tax Planning for the 3.8% Net Investment Income Tax - Grouping of Businesses

Tax

By Ryan Broze

The implementation of the 3.8% Net Investment Income (NII) Tax should remind all individual taxpayers to revisit their tax planning and strategies previously implemented. In accordance with current proposed Internal Revenue Code (IRC) Regulation §1.1411, the Treasury Department has determined that the NII tax is a material change in facts for taxation. Consequently, any taxpayer who has adjusted gross income in excess of the NII tax threshold ($200,000 filing single, $250,000, married filing joint) and has net investment income is eligible to regroup activities in accordance with IRC §469. This permitted regrouping may result in reduced NII tax. The ability to regroup activities under Regulation §1.411 is available to a taxpayer only for the first year the taxpayer is subject to the NII tax.  If the taxpayer does not utilize this opportunity, he/she will not be able to alter his/her grouped or ungrouped activities until there is material change in the facts and circumstances that make the original grouping clearly inappropriate.

For further discussions related to appropriate business activity groupings and the ability to potentially change groupings, please consult your Schneider Downs & Co., Inc. tax advisor.

© 2013 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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