Question

Sarah (single) is a 50 percent owner in Beehive LLC (taxed as a partnership). Sarah does not do any work for Beehive. Beehive LLC. reported $600,000 of taxable business income for the year (2020). Before considering her 50 percent business income allocation from Beehive and the self-employment tax deduction (if any), Sarah’s adjusted gross income is $150,000 (all employee salary). Answer the following questions for Sarah.

What is Sarah’s net investment income tax liability (assume no investment expenses)?

Answer 1

Salary	150,000
Allocated Income (600,000 x 50% )	300,000
Modified Adjusted gross income	450,000
Net investment income tax Liability	$ 9,500
( (450,000 - 200,000 ) x 3.8% }