The Patient Protection and Affordable Care Act (P.L.111–148), (as amended by the Health Care and Education Reconciliation Act of 2010 (Pub.L. 111-152), contains a 3.8% net investment income tax (NIIT), that will impact estate and trusts, starting in 2013.
For tax years beginning after 2012, new Internal Revenue Code (IRC) section 1411 imposes a 3.8% tax on certain passive investment income of individuals and of trusts and estates above certain threshold amounts. To assist in planning to minimize the impact of the tax on estates and trusts, practitioners should understand what income it applies to and how the tax is calculated.
This page contains resources for members to better assist their clients in planning for the 3.8% net investment income tax and its impact on trusts and estates. It includes links to webcasts that cover the new tax and estate and trust income, avoiding gains on funding, the timing of distributions, proper investments to avoid the NIIT and more. We appreciate the contributions from Robert Keebler, an AICPA member who developed many of these resources and is making them available to our members.
Archived Webcasts and Podcasts:
- Jan. 29, 2014 (rebroadcast Feb. 5, 2014) - Implementation of the Net Investment Income Tax on Estates and Trusts (Presentation slides)
- Feb. 27, 2014 - Form 8960 Prep - Computing the New 3.8% NIIT on Form 1040 (Presentation slides)
- Jan. 31, 2014 - Q &A on NIIT for Individuals
- Jan. 8, 2014 - Interview with David Kirk and Adrienne Mikolashek (Presentation slides)
- Jan. 8, 2014 - Form 8960 Draft Instructions (Presentation slides)
- Dec. 17, 2013 - Understanding the NIIT and its Effects (Presentation slides)
- Dec. 13, 2013 - Understanding the 3.8% NIIT and Its Effect on Individuals, Trusts and Estates, and Closely Held Businesses - After the Final Regs Podcast (Powerpoint) (2 Pager) (Flowchart)
- Dec. 9, 2013 - A Discussion on the NIIT with the Drafters of the Regs
- Nov. 26, 2013 - NIIT Final Regulations (Presentation slides)
- Oct. 30, 2013 - Year-End Planning for the Net Investment Income Tax on Individuals, Estates and Trusts, Partners and S Corporation Shareholders (Presentation slides)
- Aug. 29, 2012 - Proactive Planning in Preparation for 2013: In-Depth Estate Planning Strategies to Consider Prior to Year-End
- Aug. 15, 2012 - Series: Proactive Planning in Preparation for 2013 The 3.8% Net Investment Income Tax and Its Impact on Trusts & Estates
- July 12, 2012 - Strategies to plan for the 3.8% NIIT in connection with trusts and estates (Podcast)
- Final Form 8960 Instructions
- Final Form 8960
- Draft Instructions for Form 8960
- Opportunities Prior to Possible 2013 Tax Law Changes
- Draft Instructions for Form 5227
- The Definitive Questions and Answers on the New Net Investment Income Tax (Updated for Final Regulations) - Forbes, Dec. 4, 2013
- Article on Advisers Unclear How to Strategize to Minimize 3.8% Investment Tax
- Article on trusts and estate fiduciaries and the net investment income tax
- Article on Understanding the 3.8% NIIT (and estates and trusts impact) - article published by Leimberg Information Services, Inc.
- Article (WSJ) on Investment Tax Leaves Advisers Guessing
- Final regulation on net investment income tax - TD 9644 (Nov. 26, 2013)
- New proposed regulation on net investment income tax - REG-130843-13 (Nov. 26, 2013) and AICPA comments (March 31, 2014)
- Proposed regulation on net investment income tax (Nov. 20, 2012) and AICPA comments (May 8, 2013)
- Proposed regulation on additional medicare tax (Nov. 30, 2012)
- FAQs on Net Investment Income Tax (Nov. 30, 2012)
- In-depth newsletter on planning with the 3.8% NIIT from Michael Kitces
For additional AICPA resources and information on the section 1411 net investment income tax, see the AICPA section 1411 NIIT webpage.
The AICPA will continue to keep you informed as IRS releases expected guidance on this issue.