Which of the following items is subject to the net investment income tax when an individual partner is a material participant in the partnership?
A)Partner's distributive share of dividends
B)Partner's distributive share of interest
C)Partner's distributive share of ordinary business income
D)Both partner's distributive share of dividends and partner's distributive share of interest

Question

Quizplus · Accepted Answer

The net investment income tax applies to certain investment income such as dividends and interest. Therefore, a partner's distributive share of dividends and interest from a partnership would be subject to this tax, regardless of the partner's participation level in the partnership. Ordinary business income, on the other hand, is not subject to the net investment income tax when the partner materially participates in the partnership.

Which of the Following Items Is Subject to the Net