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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10131
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If a partnership owns 50% of a C corps stock. All the

Customer Question

If a partnership owns 50% of a C corps stock. All the partners are full time employees. If the stock is sold is it subject to the net investment income tax.
Submitted: 8 months ago.
Category: Tax
Expert:  Lane replied 8 months ago.

Hi, the answer will depending each individual partner's situation.

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Sale of stock for a gain is certainly something that COULD subject the ultimate taxpayer to NIIT.

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In general, investment income includes, but is not limited to: ***** ***** capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities and businesses that are passive activities to the taxpayer (within the meaning of section 469).

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For an individual to be subject to the NIIT (again, these partners will have their proportionate share passed through the K-1, so this ends up being an individual capital gains issue) they must be a certain income levels.

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Married filing jointly

$250,000

Married filing separately

$125,000

Single

$200,000

Head of household (with qualifying person)

$200,000

Qualifying widow(er) with dependent child

$250,000

Expert:  Lane replied 8 months ago.

So, yes, if the i taxpayer partner is above the threshold for their filing status, their WAS a gain on sale, the the additional 3.8% would be added to the capital gains taxation, making the effective rate 3.8% higher for the portion of gain that falls into that bracket

Expert:  Lane replied 8 months ago.

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I hope this has helped.

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd really appreciate a positive rating (using the rating request, faces, or stars on your screen)

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That's the only way I'll be credited for the work here.

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Thank you!

Lane

I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

Expert:  Lane replied 8 months ago.

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