Form 8960 - Net Investment Income Tax FAQs (1040)

Alerts and notices

Leave feedback

Please rate this topic.

Excellent  |  Good  |  Average  |  Poor

Did you find the information you need?

Yes  |  No

Name (optional):

Leave this blank:

Please tell us how we can make this information more helpful.


Characters left:

The following includes answers to common questions about Form 8960.

Form 8960 line 4a reports the amounts from Form 1040 line 17. Line 4b is the adjustment to remove income or loss allocable to a non-section 1411 trade or business from the total reported on line 4a. UltraTax/1040 determines a non-section 1411 trade or business by:

  • Screen Rent, Type of property = 7 (Self-rental), with income
  • Screen Rent-2, Passive activity code = 3
  • Screen Rent-2, Passive activity code = 4
  • Screen 4835-2, Passive activity code = 3
  • Screen 4835-2, Passive activity code = 4
  • Screen K1, Passive activity code = 3, non-passive income is not net investment income
  • Screen K1, Passive activity code = 4, non-passive income is not net investment income
  • Screen K1T-2, Passive activity code = 3, non-passive income is not net investment income
  • Screen K1T-2, Passive activity code = 4, non-passive income is not net investment income

For the disposition of an active interest in a partnership or S corporation as described in section 1411(c)(4)(A), the gain or loss is taken into account for net investment income only to the extent of the net gain that would be taken into account if all the property of the partnership or S corporation were sold for fair market value immediately before the disposition of the interest, per Regulations section 1.1411-7.

A current year disposition of a partnership interest or S corporation stock is entered on Screen B&D, Schedule for detail, with Business entered in the Type column and the Form and Unit selected. A current year installment sale is entered on Screen K1Sale in the K1 folder. UltraTax CS defaults to excluding from net investment income all gain or loss associated with an activity to which net investment income tax does not apply. If the transaction is a disposition of interest in the partnership or S corporation, enter the details of the disposition in the statement dialog on the field Adjustment from disposition of partnership interest or S corporation stock on Screen ACA Tax. UltraTax CS will include this information in the required statement for Form 8960. The gain or loss will appear as an excluded item in the Form 8960 – Net Investment Income Worksheet 1, Form 8960, Line 5b, Net gain or loss from disposition of property not subject to net investment income tax and will also be included as a Disposition of interest. UltraTax CS will then produce the Form 8960, Line 5c, Adjustment from disposition of partnership interest or S corporation stock worksheet on Form 8960 – Net Investment Income Worksheet 2 and enter the adjustment amount on Form 8960 line 5c.

UltraTax CS defaults to including in net investment income all gain on installment sales from Screen InstPY in the PerSale folder. If an installment sale represents a prior year disposition of an active interest in a partnership or S corporation the gain may need to be adjusted by the application of Regulations section 1.1411-7. Enter the details of the disposition in the statement dialog on the field Adjustment from disposition of partnership interest or S corporation stock on Screen ACA Tax and indicate that it refers to an installment sale by entering X in the Installment Sale column. UltraTax CS will then produce the Form 8960, Line 5c, Adjustment from disposition of partnership interest or S corporation stock worksheet on Form 8960 – Net Investment Income Worksheet 2 and enter the adjustment amount on Form 8960 line 5c.

Amounts entered in the following fields are not included in the net investment income calculation since the amounts are not attributable to 2013 net investment income.

  • Screen St Pmt - Paid with '12 return field
  • Screen A - '12 income taxes paid in '13 field 

2013 state estimated payments entered in the Calculated amount fields on Screen St Pmt are not included in the net investment income calculation because UltraTax CS does not automatically assume calculated amounts were paid. To include these amounts in the calculation, mark the Treat calculated amounts as paid field on Screen St Pmt. If the fourth quarter payment was made prior to January 2014, enter a Date paid to include the fourth quarter amount in the calculation.

The State income tax allocable to NII (Force) field (located in Screen ACA Tax in the Taxes folder) can be used to force an amount different than the UltraTax CS calculated amount.

Share This