In 2017, Amber earned a salary of $230,000 and also had the following items of investment income: $28,000 net short-term capital gain on sale of stock, $8,000 dividend income, $6,000 interest income from corporate bonds, and $5,000 interest income from tax-exempt municipal bonds. Compute Amber's net investment income (NII) tax if the tax rate is 3.8% and the threshold is $200,000.

Question

Quizplus · Accepted Answer

NII is $42,000 ($28,000 + $8,000 +$6,000); tax-exempt income is excluded. Modified AGI in excess of the threshold is $72,000 ($230,000 + $42,000 - $200,000). The NII tax is assess on the lesser of $42,000 NII or $72,000 excess. $42,000 x 3.8% = $1,596.

In 2017, Amber Earned a Salary of $230,000 and Also