Article on Net Investment Income Tax

Mark R. Parthemer (Bessemer Trust) and Sasha A. Klein (Bessemer Trust) recently published an article entitled, Taking Control: Six Notable Strategies to Manage Net Investment Income Tax, Prob. & Prop., Nov./Dec. 2014, at 32.  Provided below is a portion of the article’s introduction:

At this point, many of your clients have filed their 2013 income tax returns—and what an eye-opener it was for some of them!  As advisors, we know 2013 brought with it higher income tax rates and new taxes, including the IRC § 1411 Net Investment Income Tax (NIIT), aka the 3.8% Medicare Surtax.  As a result of this filing season, now your clients do, too!

There has been a large focus by many advisors on NIIT (especially given that it is a relatively small tax at 3.8%).  But a lot of the writing and speaking thus far has been on learning about the tax—when it applies and to what.  As with any new tax, this is an important learning curve, and as the IRS continues to work with advisors on the publication of (so far) two sets of Proposed Regulations and one set of partial Final Regulations, there will be more to learn.