In 2017, Jacob earned a salary of $185,000 and also had the following items of investment income: $39,000 net short-term capital gain on sale of stock, $7,000 dividend income, $5,000 interest income from corporate bonds, and $4,000 interest income from tax-exempt municipal bonds. Compute Jacob's net investment income (NII) tax.

Question

Quizplus · Accepted Answer

NII is $51,000 ($39,000 + $7,000 +$5,000); tax-exempt income is excluded. Modified AGI in excess of the threshold is $36,000 ($185,000 + $51,000 - $200,000). The NII tax is assess on the lesser of $51,000 NII or $36,000 excess. $36,000 x 3.8% = $1,368.

In 2017, Jacob Earned a Salary of $185,000 and Also