1040-US: Form 8960, line 4b calculation

Alerts and notices

Question

How does Form 8960 line 4b, Adjustment for net income or loss derived in the ordinary course of a non-section 1411 trade or business calculate?

Answer

Form 8960 line 4a reports the amounts from Form 1040, Schedule 1, 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 K1-2, Passive activity code =  3, non-passive income is not net investment income
  • Screen K1-2, Passive activity code =  4, non-passive income is not net investment income
  • Screen K1T-3, Passive activity code =  3, non-passive income is not net investment income
  • Screen K1T-3, Passive activity code =  4, non-passive income is not net investment income
  • Any activity with Trade or business to which net investment income tax (NIIT) applies = 2, No, is considered a non-section 1411 trade or business

Related topic: Form 8960 - Net Investment Income Tax FAQs (1040)