Jimbo (age 52) is single with no dependents. Jimbos adjusted gross income for 2018 is $201,000,...

Jimbo (age 52) is single with no dependents. Jimbos adjusted gross income for 2018 is $201,000, which consists of his salary of $150,000 and long-term capital gain income of $51,000. What is the amount of net investment income- not tax income, if any, that jimbo will pay for 2018?

Expert Solution

Assumed as it relates to IRS gov

"As per IRS, Net investment income includes following :

Distributions from annuities
Interest
Dividends
Capital gains
Income from passive activities
Rents
Royalties etc "

"The NIet investment income tax applies only when a taxpayer’s modified adjusted gross income exceeds a threshold amount. The thresholds for each filing status are as follows for 2018 :

Single: $200,000
Married filing jointly: $250,000
Married filing separately: $125,000
Head of household: $200,000
Qualifying widow(er) with dependent child: $250,000 "

In this case Jimbo's threshold for net investment income tax is $200,000.

Net investment income tax is based on the lesser of the amount by which their modified adjusted gross income exceeds the threshold or net investment income.

Net investment income tax = 3.8% on base

Net investment income tax base = lessor of ($201,000-200,000) or $51,000 = $1,000

Net investment income tax = Tax base * 3.8% =$1,000*3.8% = $38

Net investment income tax jimbo will pay for 2018 = $38

ekkarill92 answered 2 years ago

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