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Formulář 8960 Návod

Pokyny pro formulář 8960, Čistá daň z příjmů z investic, individuální daně, nemovitosti a svěřenectví

Rev. 2023

Související formuláře

  • Formulář 8960 - Čistá daň z příjmů z investic (Individuals, Estates, and Trusts)
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Department of the Treasury  
Internal Revenue Service  
2023  
Instructions for Form 8960  
Net Investment Income Tax—Individuals, Estates, and Trusts  
Section references are to the Internal Revenue Code unless  
otherwise noted.  
Gross income and net gain specifically excluded by section  
1411, related regulations, or other guidance published in the  
Internal Revenue Bulletin.  
Examples of excluded items are:  
Future Developments  
For the latest information about developments related to Form  
8960 and its instructions, such as legislation enacted after they  
were published, go to IRS.gov/Form8960.  
Wages,  
Unemployment compensation,  
Alaska Permanent Fund Dividends,  
Alimony,  
Social security benefits,  
Tax-exempt interest income,  
Income from certain qualified retirement plan distributions,  
General Instructions  
Reminders  
and  
Income subject to self-employment taxes.  
Charitable contribution deduction for electing small busi-  
ness trusts (ESBTs). Line 18b of Form 8960 was updated to  
reflect changes outlined in P. L. 115-97, section 13542, that  
amended the way the S portion of an ESBT accounts for  
charitable contribution deductions under section 170(b) instead  
of section 641(c), effective January 1, 2018. See Line 18b  
Net investment income. Generally, net investment income  
includes gross income from interest, dividends, annuities,  
royalties, and rents, unless they’re derived from the ordinary  
course of a trade or business that isn’t (a) a passive activity, or  
(b) a trade or business of trading in financial instruments or  
commodities. In addition, net investment income includes other  
gross income derived from a trade or business that’s (a) a  
passive activity, or (b) a trade or business of trading in financial  
instruments or commodities. Additionally, net investment income  
includes net gain (to the extent taken into account in computing  
taxable income) attributable to the disposition of property other  
than property held in a trade or business that’s not (a) a passive  
activity, or (b) a trade or business of trading in financial  
instruments or commodities. To arrive at net investment income,  
the above items are reduced by deductions allowed against the  
income tax that are properly allocable to those items of gross  
income or net gain. See section 1411(c) and Regulations  
sections 1.1411-4 and 1.1411-10(c).  
Trade or business income subject to net investment in-  
come tax (NIIT). Line 4a of Form 8960 was amended to bring  
attention to certain income reported on Schedule C (Form 1040)  
and Schedule E (Form 1040) that is subject to NIIT. This change  
was made to the instructions for Form 8960 in tax year 2022 to  
better reflect section 1411(c)(2).  
These instructions are based mostly on Regulations sections  
1.1411-1 through 1.1411-10.  
Who Must File  
Attach Form 8960 to your return if your modified adjusted gross  
income (MAGI) is greater than the applicable threshold amount.  
Passive foreign investment company (PFIC). Generally, a  
PFIC is any foreign corporation if at least 75% of its gross  
income is passive income or an average of at least 50% of its  
assets produce passive income or are held for the production of  
passive income. See section 1297(a).  
Purpose of Form  
Use Form 8960 to figure the amount of your Net Investment  
Income Tax (NIIT).  
Qualified electing fund (QEF). Generally, a QEF is a PFIC for  
which the taxpayer has made an election under section 1295(b)  
and the PFIC complies with IRS requirements for determining  
ordinary earnings and net capital gain. See section 1295(a).  
Definitions  
Controlled foreign corporation (CFC). Generally, a CFC is  
any foreign corporation if more than 50% of its voting power or  
stock value is owned or considered owned by U.S. shareholders  
(as defined in section 951(b)) on any day during the tax year.  
Certain foreign insurance companies are considered CFCs if  
more than 25% of their voting power or stock value is owned or  
considered owned by U.S. shareholders (as defined in section  
951(b)) on any day during the tax year. See section 957(a) and  
(b). Additionally, certain foreign insurance companies with  
related person insurance income may be CFCs. See section  
953(c). A specified foreign corporation described in section  
965(e)(1)(B) and Regulations section 1.965-1(f)(45)(i)(B) that is  
not otherwise a CFC is treated as a CFC for purposes of  
Regulations section 1.1411-10. See Regulations section  
1.965-1(d).  
Section 1.1411-10(g) election. An election made under  
Regulations section 1.1411-10(g) (section 1.1411-10(g)  
Section 1411 trade or business. Generally, a trade or  
business that’s either a passive activity for the taxpayer or is a  
trade or business of trading in financial instruments or  
commodities. See section 1411(c)(2) and Regulations section  
1.1411-5(a).  
Recordkeeping  
For the NIIT, certain items of investment income and investment  
expense receive different treatment than for the regular income  
tax. Therefore, you need to keep all records and worksheets for  
the items you need to include on Form 8960. Keep all records for  
the entire life of the investment to show how you calculated  
basis. You’ll need to know what you did in prior years if the  
investment was part of a carryback or carryforward.  
Excluded income. Excluded income means:  
Income excluded from gross income in chapter 1 of the  
Internal Revenue Code;  
Income not included in net investment income; and  
Dec 8, 2023  
Cat. No. 53783S  
     
check the appropriate checkbox near the top of Form 8960, Part  
I.  
Application to Individuals  
U.S. citizens and residents. Individuals who have for the tax  
year (a) MAGI that’s over an applicable threshold amount, and  
(b) net investment income, must pay 3.8% of the smaller of (a) or  
(b) as their NIIT.  
Once you make either election, its duration and termination  
are governed by sections 6013(g) and 6013(h), respectively, and  
related regulations.  
The applicable threshold amount is based on your filing  
You can make either election on an amended return only if the  
tax year for which you’re making the election, and all tax years  
affected by the election, aren’t closed by the period of limitations  
on assessment under section 6501.  
status.  
Married Filing Jointly or Qualifying Surviving Spouse is  
$250,000.  
Married Filing Separately is $125,000.  
Single or Head of Household is $200,000.  
If you elect to apply a section 6013(g) election for NIIT  
purposes and later determine that you didn’t meet the criteria for  
doing so in that tax year, your election for NIIT purposes will have  
no effect that year and for all future years. However, if, in a later  
year, you meet the criteria to elect to apply your section 6013(g)  
election for NIIT purposes, you’ll be treated as though you did  
elect to apply your section 6013(g) election in that later year  
unless you file (or amend) your return for that later year to report  
your NIIT without the election for NIIT purposes.  
Nonresidents. The NIIT doesn’t apply to nonresident alien  
(NRA) individuals. If you’re a U.S. citizen or resident married to  
an NRA, your filing status will be married filing separately for  
purposes of determining your MAGI, net investment income, and  
whether you’re subject to the NIIT. However, see information,  
later, about certain elections to file jointly with NRA spouses.  
Dual-resident individual. If you’re a dual-resident individual,  
within the meaning of Regulations section 301.7701(b)-7(a)(1),  
you’ll generally be treated as a U.S. resident for purposes of the  
NIIT. However, you’ll be treated as an NRA for purposes of the  
NIIT if:  
Application to Estates and Trusts  
Domestic estates and trusts. The NIIT applies to estates and  
trusts that have undistributed net investment income and  
adjusted gross income (AGI) in excess of the threshold amount.  
The NIIT is 3.8% of the lesser of:  
You determine you would be treated as a resident of a foreign  
country for purposes of an income tax treaty between the United  
States and that foreign country;  
The undistributed net investment income for the tax year; or  
The excess, if any, of AGI (as defined in section 67(e)) over  
You elect to be treated as a resident of the foreign country for  
purposes of computing your U.S. income tax liability; and  
the applicable threshold amount.  
You file Form 1040-NR, U.S. Nonresident Alien Income Tax  
Return, and Form 8833, Treaty-Based Return Position  
Disclosure Under Section 6114 or 7701(b), as provided in  
Regulations section 301.7701(b)-7(b).  
The applicable threshold amount is the dollar amount at  
which the highest tax bracket in section 1(e) begins for the tax  
year. See the instructions for Form 1041, Schedule G, line 1a,  
and the instructions for Form 1041-QFT, line 12, for the dollar  
amount at which the highest tax bracket begins for the tax year.  
Dual-status individual. If you were a dual-status  
individual—that is, an individual who was a resident of the United  
States for part of the year and an NRA for the other part of the  
year—you’re subject to the NIIT only for the portion of the year  
you were a U.S. resident. The relevant threshold amount isn’t  
reduced or prorated for a dual-status individual.  
Exception for certain domestic trusts. The following trusts  
aren’t subject to the NIIT.  
Trusts that are exempt from income taxes imposed by subtitle  
A of the Internal Revenue Code.  
If you were a U.S. resident on the last day of the tax year, file  
Form 1040 or 1040-SR and attach a statement showing your  
income for the part of the year you were a nonresident. You can  
use Form 1040-NR as the statement.  
If you were a nonresident on the last day of the tax year, file  
Form 1040-NR and attach a statement showing your income for  
the part of the year you were a U.S. resident. You can use Form  
1040 or 1040-SR as the statement.  
1. Charitable trusts and qualified retirement plan trusts  
exempt from tax under section 501.  
2. Charitable Remainder Trusts exempt from tax under  
section 664.  
A trust or decedent's estate in which all of the unexpired  
interests are devoted to one or more of the purposes described  
in section 170(c)(2)(B).  
Trusts that are classified as “grantor trusts” under sections  
671–679.  
For more information, see the Instructions for Form 1040-NR  
Electing Alaska Native Settlement Funds (described in  
and Pub. 519, U.S. Tax Guide for Aliens.  
section 646).  
Perpetual Care (Cemetery) Trusts (described in section  
Election To File Jointly With Nonresident  
Spouse—Section 6013(g) or 6013(h)  
642(i)).  
Trusts that aren’t classified as “trusts” for federal income tax  
If you and your spouse elect to file a joint return under section:  
purposes. For example:  
6013(g) (where an NRA is married to a U.S. citizen or resident  
1. Real estate investment trusts, and  
2. Common trust funds.  
at the end of the tax year); or  
6013(h) (where at least one spouse was an NRA at the  
beginning of the tax year, but is a U.S. citizen or resident married  
to a U.S. citizen or resident at the end of the tax year),  
Special computational rules for qualified funeral trusts  
(QFTs). The NIIT applies to the QFT (as defined in section 685)  
by treating each beneficiary's interest in that beneficiary's  
contract as a separate trust. Complete one consolidated Form  
8960 for all beneficiary contracts subject to NIIT.  
you can also elect to apply the joint return election for NIIT  
purposes. If you made a section 6013(g) or 6013(h) election, but  
don’t elect to apply the joint return election for NIIT purposes,  
then, for NIIT purposes, you’ll file as married filing separately.  
If a QFT has one or more beneficiary contracts that have net  
To make either election for NIIT purposes, use your combined  
items of income, gain, loss, and deduction from your joint return  
to figure your net investment income and MAGI; use the married  
filing jointly return applicable threshold amount ($250,000); and  
investment income in excess of the threshold amount:  
Complete Form 8960, lines 1–12, using only the sum of the  
net investment income of the beneficiary contracts that have net  
investment income in excess of the threshold amount; and  
On line 19b:  
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Instructions for Form 8960 (2023)  
         
1. Insert the number of beneficiary contracts that have net  
investment income in excess of the threshold amount next to the  
entry on the line, and  
2. Multiply the number of beneficiary contracts that have net  
investment income in excess of the threshold amount by the  
threshold amount for the year and enter that amount on line 19b.  
Note. The NIIT doesn’t apply directly to foreign estates or  
foreign trusts.  
Passive Activity  
General Rules  
Net investment income generally includes income and gain from  
passive activities. A passive activity for purposes of net  
investment income has the same meaning as under section 469.  
A passive activity includes any trade or business in which you  
don’t materially participate. A passive activity also includes any  
rental activity, regardless of whether you materially participate.  
There are limited exceptions for rentals. See the discussion on  
rentals, later. For more details on passive activities, see the  
Instructions for Form 8582, Passive Activity Loss Limitations, and  
Pub. 925, Passive Activity and At-Risk Rules.  
Example. For 2023, a QFT has a beneficiary contract with  
$16,000 of interest income and another beneficiary contract with  
$21,000 of dividend income. Neither contract has any properly  
allocable deductions. The threshold amount for the 2023 tax  
year is $14,450. Therefore, the QFT has two beneficiary  
contracts with net investment income in excess of the threshold  
amount for the year.  
The QFT will report $16,000 on line 1 (interest) and $21,000  
on line 2 (dividends). Lines 12, 18a, and 19 would each be  
$37,000 ($16,000 plus $21,000). Enter “2” on the dotted line at  
the end of line 19b and enter $28,900 ($14,450 × 2) on the entry  
line for 19b. Lines 19c and 20 will be $8,100 ($37,000 less  
$28,900). On line 21, enter the NIIT liability of $307.80 ($8,100 ×  
3.8% (0.038)).  
Trade or Business Activities  
The definition of trade or business for NIIT purposes is limited to  
a trade or business within the meaning of section 162. This is  
more restrictive than the definition of a trade or business activity  
for purposes of the passive activity loss rules. For example,  
under the passive activity loss rules, a trade or business includes  
any activity conducted in anticipation of the commencement of a  
trade or business and any activity involving research or  
Special computational rules for electing small business  
trusts (ESBTs). The NIIT has special computational rules for  
ESBTs. In general, ESBTs compute their NIIT in 3 steps.  
1. The ESBT separately calculates the undistributed net  
investment income of the S portion and non-S portion according  
to the general rules for trusts under chapter 1 of the Code, and  
then combines the undistributed net investment income of the S  
portion and the non-S portion. In the case of an ESBT that has  
an S portion and a non-S portion, complete lines 1–11 of Form  
8960 using the items from the non-S portion, and add  
undistributed net investment income of the S portion to net  
investment income on line 7.  
2. The ESBT determines its AGI, solely for purposes of NIIT,  
by adding the net income or net loss from the S portion to the  
AGI of the non-S portion as a single item of income or loss. See  
the instructions for line 19a for more information.  
experimentation. In some cases, income from activities that  
aren’t passive activities under section 469 will be included in net  
investment income because the activity doesn’t rise to the level  
of a trade or business within the meaning of section 162. The  
activity must be a trade or business within the meaning of  
section 162 and be nonpassive for purposes of section 469  
before the income is excluded from the NIIT. If you own an  
interest in a pass-through entity, the determination of whether  
that’s a trade or business is made at that entity's level.  
Real Estate Professionals  
If you’re a real estate professional for purposes of section 469(c)  
(7), your rental income or loss won’t be passive if you materially  
participated in the rental real estate activity with certain  
3. To determine whether the ESBT is subject to NIIT, the  
ESBT compares the combined undistributed net investment  
income with the excess of its AGI over the section 1(e) threshold.  
However, your rental income is included in net investment  
income if the income isn’t derived in the ordinary course of a  
trade or business. Qualifying as a real estate professional  
doesn’t necessarily mean you’re engaged in a trade or business  
with respect to the rental real estate activities. If your rental real  
estate activity isn’t a section 162 trade or business or you don’t  
materially participate in the rental real estate activities, the rental  
income will be included in NIIT.  
For an ESBT with only S corporation income (no non-S  
portion), complete Form 8960 using the items from the S  
portion. For ESBTs with an S portion and a non-S  
TIP  
portion, use Form 8960 as a worksheet for calculating the  
amounts to enter on line 7 and line 19a. On the S portion's Form  
8960 worksheet, enter the S portion's net investment income on  
line 7 of the trust's Form 8960 and combine line 19a of the Form  
8960 worksheet with the non-S portion's AGI to arrive at the  
amount on line 19a.  
For additional information on real estate professionals, see  
section 469(c)(7) and Pub. 925.  
See Regulations section 1.1411-3(c) for more details and  
examples.  
Safe Harbor for Real Estate Professionals  
Special computational rules for bankruptcy estates of an  
individual. A bankruptcy estate of an individual debtor is  
treated as an individual for purposes of the NIIT. Regardless of  
the actual marital status of the debtor, the applicable threshold  
for purposes of determining the NIIT is the amount applicable for  
a married person filing separately.  
You qualify for the safe harbor if you’re a real estate professional  
for purposes of section 469 and you:  
Participate in each rental real estate activity for more than 500  
hours during the tax year, or  
Participated in a rental real estate activity for more than 500  
hours in any 5 tax years (whether or not consecutive) during the  
10 tax years immediately prior to this tax year.  
Distributions from foreign estates and foreign trusts. If  
you’re a U.S. person who receives a distribution of income from a  
foreign estate or foreign trust, you must generally include the  
distribution in your net investment income calculation to the  
extent that the income is included in your AGI for regular income  
tax purposes. However, you don’t need to include any  
distributions of accumulated income that you receive from a  
foreign trust.  
If you qualify, your gross rental income from your rental real  
estate activity is treated as though derived in the ordinary course  
of a trade or business and isn’t included in your net investment  
income. If you qualify in the year you dispose of the property  
used in the rental real estate activity, the amount of gain or loss  
from the disposition is also deemed to be derived from property  
used in the ordinary course of a trade or business and isn’t  
included in your net investment income.  
-3-  
Instructions for Form 8960 (2023)  
   
Note. For real estate professionals with a Regulations section  
1.469-9(g) election in effect, all of your rental real estate  
activities constitute a single activity for purposes of applying the  
500-hour test described in Safe Harbor for Real Estate  
income (before taking into account any suspended losses). Any  
suspended passive losses that are allowed by reason of section  
469(g) are allowed as additional properly allocable deductions.  
Economic Grouping  
You can treat one or more trade or business activities, or rental  
activities, as a single activity if those activities form an  
appropriate economic unit for measuring gain or loss under the  
passive activity loss rules. For additional information on passive  
activity grouping rules, see Pub. 925.  
Note. If you're a real estate professional under section 469(c)  
(7), but you’re unable to satisfy the qualifications for the safe  
harbor, you’re not precluded from establishing that the gross  
income and gain or loss from the disposition of property  
associated with your rental real estate activity isn’t included in  
net investment income.  
Regrouping rules. The passive activity grouping rules  
determine the scope of your trade or business and whether that  
trade or business is a passive activity for purposes of the NIIT.  
The proper grouping of a rental activity with a trade or business  
activity won’t generally convert any gross income from rents into  
gross income derived from a trade or business.  
Generally, you may not regroup activities unless your  
grouping was clearly inappropriate when originally made, or has  
become clearly inappropriate because of changed facts and  
circumstances.  
However, under the NIIT “fresh start” election, you may  
regroup for the first tax year you’re subject to the NIIT (without  
the effect of the regrouping). You may regroup only once under  
this election and that regrouping will apply to the tax year for  
which you regroup and all future tax years. If you’re subject to the  
NIIT for 2013 and you don’t regroup, you may make the election  
for the first tax year beginning after 2013 that you’re subject to  
the NIIT.  
You may regroup on an amended return, but only if you  
weren’t subject to the NIIT on your original return (or previously  
amended return), and if, because of a change to the original  
return, you owe NIIT for the year. For additional rules regarding  
regrouping on amended returns, see Regulations section  
1.469-11(b)(3)(iv)(C).  
Special Rules for Certain Rental Income  
For income tax purposes, Regulations section 1.469-2(f)(6)  
generally recharacterizes what would otherwise be passive  
rental income from a taxpayer's property as nonpassive where  
the taxpayer rents the property for use in a trade or business in  
which the taxpayer materially participates. Similarly, for income  
tax purposes, a rental activity that’s properly grouped with a  
trade or business activity in which the taxpayer materially  
participates under Regulations section 1.469-4(d)(1) is a  
nonpassive activity. For purposes of calculating your net  
investment income, the gross rental income in both of these  
situations is treated as though it’s derived in the ordinary course  
of a trade or business. Further, upon the disposition of the assets  
associated with the rental activity, any gain or loss is also treated  
as gain or loss attributable to the disposition of property held in a  
nonpassive trade or business and not included in your net  
investment income. For these purposes, the nonpassive trade or  
business can’t be a business trading in financial instruments or  
commodities.  
Treatment of Former Passive Activities  
A former passive activity is any activity that was a passive activity  
in a prior tax year but isn’t a passive activity in the current year. A  
prior tax year's unallowed loss from a former passive activity is  
allowed to the extent of current year income from the activity  
under section 469(f)(1)(A). For purposes of determining your net  
investment income, suspended losses from former passive  
activities are allowed as a properly allocable deduction, but only  
to the extent the net income or net gain from the former passive  
activity is included in your net investment income. Any remaining  
suspended losses from the former passive activity are allowed  
as a properly allocable deduction, but only to the extent the net  
income or net gain from other passive activities is included in  
your net investment income. For more information, see  
Disclosure requirements. Regroupings under the NIIT “fresh  
start” are subject to the disclosure requirements of Rev. Proc.  
2010-13.  
Disposition of Partnership Interest or  
S Corporation Stock  
In general, an interest in a partnership or S corporation isn’t  
property held for use in a trade or business and, therefore, gain  
or loss from the sale of a partnership interest or S corporation  
stock is included in your net investment income.  
Regulations section 1.1411-4(g)(8) and examples.  
Adjustment  
The amount of the gain or loss from the disposition for regular  
income tax purposes is included on Form 8960, line 5a, as a  
gain or loss. If you materially participated (as defined under the  
passive activity loss rules) in a trade or business activity of the  
partnership or S corporation (or one of its subsidiaries) and that  
trade or business activity isn’t the trade or business of trading in  
financial instruments or securities, then you must calculate the  
adjustment to report on line 5c. The adjustment described below  
only applies to dispositions of equity interests in partnerships  
and stock in S corporations and doesn’t apply to gain or loss  
recognized on, for example, indebtedness owed to the taxpayer  
by a partnership or S corporation.  
Disposition of Entire Interest  
If you disposed of your entire interest in a passive activity or a  
former passive activity to an unrelated person in a fully taxable  
transaction, your losses allocable to the activity for that year  
aren’t limited by the passive activity loss rules for income tax  
purposes. A fully taxable transaction is a transaction in which  
you recognize all realized gain or loss. For purposes of  
calculating your net investment income, these losses may be  
properly allocable deductions, depending on the underlying  
character and origin of the losses.  
Note. If you dispose of an activity that’s always been a passive  
activity, the suspended passive losses from that activity are  
allowed in full as a properly allocable deduction.  
For more information on how to calculate the adjustment to  
report on line 5c, see Proposed Regulations section 1.1411-7.  
Note. If you dispose of an activity that’s a former passive  
activity, any suspended passive losses allowed in the year of  
disposition by reason of section 469(f)(1)(A) are included as  
properly allocable deductions, but only to the extent the gain on  
the disposition of the activity is included in net investment  
Note. If the tax basis of the interest in the partnership or S  
corporation for NIIT purposes is different than for regular income  
tax purposes due to certain adjustments associated with income  
from CFCs or QEFs, the amount of gain or loss may exceed the  
amount reported for regular income tax purposes.  
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Instructions for Form 8960 (2023)  
     
Example. If, in 2023, a single individual acquires stock in a  
QEF, has a QEF inclusion of $5,000, and has MAGI of $150,000,  
the individual wouldn’t have to make a section 1.1411-10(g)  
election for 2023 because section 1411 isn’t applicable. If, in  
2024, the individual has MAGI in excess of $200,000, and the  
individual would like to take QEF inclusions into account for  
purposes of section 1411 in the same manner and in the same  
tax year as those amounts are taken into account for Code  
chapter 1 purposes, the individual must make the section  
1.1411-10(g) election for 2024 in the time and manner described  
in Regulations section 1.1411-10(g).  
Required statements. Attach a statement to your return for the  
year of disposition. Your statement must include:  
The name and taxpayer identification number of the  
partnership or S corporation of which the interest was  
transferred,  
The amount of the transferor's gain or loss on the disposition  
of the interest for regular income tax purposes included on  
line 5a,  
The information provided by the partnership or S corporation  
to the transferor relating to the disposition (if any), and  
The amount of adjustment to gain or loss due to basis  
adjustments attributable to ownership in certain CFCs and  
QEFs.  
Content requirements of election. If you’re making or made  
the election in a prior year, you must check the checkbox for  
“Regulations section 1.1411-10(g) election” on the Form 8960  
filed with your original or amended return. In addition, you must  
attach a statement to your return, which includes the following.  
Deferred recognition sales (installment sales and private  
annuities). If you disposed of a partnership interest or S  
corporation stock in an installment sale transaction to which  
section 453 applies, you need to calculate your adjustment to net  
gain in the year of the disposition, even if the disposition  
occurred prior to 2013. The difference between the amount  
reported for regular income tax and NIIT will be taken into  
account when each payment is received. You must attach the  
statement described above to your return in the first year you’re  
subject to NIIT. In subsequent years, attach a statement to your  
return that provides “Adjustment relates to a deferred recognition  
sale first reported on line 5c of the (enter year) return.”  
Your name and social security number (individuals) or  
employer identification number (EIN) (estates and trusts).  
The following information for each CFC or QEF for which an  
election is made.  
1. The name of the CFC or QEF.  
2. Either the EIN of the CFC or QEF, or, if the CFC or QEF  
doesn’t have an EIN, the reference ID number of the CFC or  
QEF.  
In addition, list separately each CFC or QEF for which an  
election is being made for the first time with this return and  
include on the statement a declaration that you elect under  
Regulations section 1.1411-10(g) to apply the rules in section  
1.1411-10(g).  
Regulations Section 1.1411-10(g)  
Election  
In general, you may make the election provided in Regulations  
section 1.1411-10(g) if you own stock of a CFC or QEF. If a  
section 1.1411-10(g) election is in effect for stock of a CFC or  
QEF, generally, the amounts you include in income for regular  
income tax purposes under sections 951, 951A, and 1293 from  
the stock of the CFC or QEF are included in net investment  
income, and distributions from the stock of the CFC or QEF,  
described in section 959(d) or 1293(c), are excluded from net  
investment income.  
Special Rule for Traders in Financial  
Instruments or Commodities  
Gains and losses from your trade or business of trading in  
financial instruments or commodities aren’t subject to  
self-employment taxes. However, interest expense and other  
investment expenses are deducted by a trader on Schedule C  
(Form 1040), Profit or Loss From Business, if the expenses are  
from the trading business. A special rule may apply to a trader in  
financial instruments or commodities to reduce net investment  
income. The trader's interest and other investment expenses, to  
the extent the expenses aren’t used to reduce the trader's  
self-employment income, may be deductible for NIIT.  
Your election applies only to the specific stock of the CFC or  
QEF for which it’s made and stock of the CFC or QEF that you  
subsequently acquire. If you own a CFC or QEF through certain  
domestic pass-through entities, such as a domestic partnership,  
the entity may make the election for the stock of the CFC or QEF  
and you’ll be considered as having made the election with  
respect to the stock of the CFC or QEF owned or subsequently  
acquired by the pass-through entity. The election by the  
pass-through entity applies only to stock of the CFC or QEF held  
or subsequently acquired directly or indirectly by the  
Specific Instructions  
Part I—Investment Income  
Elections for Investment Income  
If you’re making the section 6013(g) or 6013(h) election (see  
6013(g) or 6013(h), earlier), check the corresponding checkbox.  
pass-through entity. The pass-through entity's election doesn’t  
apply to any stock of the CFC or QEF that you personally hold or  
subsequently acquire. If the entity doesn’t make the election, you  
may make the election for the stock of the CFC or QEF owned  
through the entity.  
If you’re making or have made a section 1.1411-10(g) election  
the corresponding checkbox and attach a statement to your  
return, as described earlier under Content requirements of  
Timing of election. Your election applies to the tax year for  
which it’s made and later tax years, and applies to all interests in  
the CFC or QEF that you later acquire. You can’t revoke the  
election. In general, the election must be made no later than the  
first tax year beginning after 2013, in which you include an  
amount in income for regular income tax purposes under section  
951(a), 951A, or 1293(a) for the stock of the CFC or QEF, and  
are subject to NIIT or would be subject to NIIT if you made the  
election for the stock of the CFC or QEF. The election may be  
made for a tax year beginning before 2014. The election can be  
made on an original or an amended return, provided that the tax  
year for which the election is made, and all tax years affected by  
the election, aren’t closed by the period of limitations on  
assessment under section 6501. For more information, see  
Regulations section 1.1411-10(g).  
Line 1—Taxable Interest  
Enter the amount of taxable interest received. Include the  
following amount from your return.  
Form 1040 or 1040-SR, line 2b.  
Form 1041, line 1.  
Form 1041-QFT, line 1a.  
Form 1040-NR, taxable interest received for period of U.S.  
residency shown on attached statement.  
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Instructions for Form 8960 (2023)  
         
Line 4a—Income From Trades/Businesses, Rental  
Real Estate, Royalties, Partnerships, S  
Corporations, and Trusts  
Adjustments to interest. Interest income earned in the  
ordinary course of your non-section 1411 trade or business is  
excluded from net investment income. If this type of interest  
income is included on line 1, use line 7 to adjust your net  
investment income.  
If line 1 includes self-charged interest income received from a  
partnership or S corporation that’s a nonpassive activity (other  
than a trade or business of trading in financial instruments or  
Income, later, for a possible adjustment to net investment  
income.  
Enter the following amount from your properly completed return.  
Schedule 1 (Form 1040), line 3.  
Schedule 1 (Form 1040), line 5.  
Form 1041, line 3.  
Form 1041, line 5.  
Form 1041-QFT, the portion of line 4 that’s income and loss  
that properly would be reported by a trust filing Form 1041 on  
Form 1041, line 5.  
Form 1040-NR, the amount properly reported on the  
attachment to your Form 1040-NR representing the amount that  
you would properly include on Schedule 1 (Form 1040), line 5, if  
you were filing Form 1040 or 1040-SR and including income and  
loss only for your period of U.S. residency.  
Line 2—Ordinary Dividends  
Enter the amount of ordinary dividends received. Include the  
following amount from your return.  
Form 1040 or 1040-SR, line 3b.  
Form 1041, line 2a.  
Form 1041-QFT, line 2a.  
Note. Income reported on Schedule 1 (Form 1040), line 3, and  
Schedule 1 (Form 1040), line 5, include both passive and  
nonpassive income, and are added to line 4a of Form 8960.  
Nonpassive income included on Schedule C (Form 1040) and  
Schedule E (Form 1040), Supplemental Income and Loss, is  
removed (as a negative) on line 4b, so that only passive income  
from Schedule C (Form 1040), and Schedule E (Form 1040)  
remain on line 4c.  
Form 1040-NR, ordinary dividends received for period of U.S.  
residency shown on attached statement.  
Adjustments to dividends. If line 2 includes dividends from  
employer securities held in an employee stock ownership plan  
(ESOP) that are deductible under section 404(k) or Alaska  
Permanent Fund Dividends, include those amounts as negative  
modifications on line 7. See Line 7—Other Modifications to  
Line 4b—Adjustment for Net Income or Loss  
Derived in the Ordinary Course of a Non-Section  
1411 Trade or Business  
Line 3—Annuities  
Use line 4b to adjust the amounts included on line 4a, for gains  
and losses that are excluded from the calculation of net  
investment income. Enter the amount of gains (as a negative  
number) and losses (as a positive number). Enter the net  
positive or net negative amount for the following items included  
on line 4a that aren’t included in determining net investment  
income.  
Enter the gross income from all annuities, except annuities paid  
from the following.  
Section 401—Qualified pension, profit-sharing, and stock  
bonus plans.  
Section 403(a)—Qualified annuity plans purchased by an  
employer for an employee.  
Section 403(b)—Annuities purchased by public schools or  
Net income or loss from a section 162 trade or business that’s  
section 501(c)(3) tax-exempt organizations.  
Section 408—Individual retirement accounts (IRAs) or  
not a passive activity and isn’t engaged in a trade or business of  
trading financial instruments or commodities.  
annuities.  
Net income or loss from a section 1411 trade or business  
Section 408A—Roth IRAs.  
that’s taken into account in determining self-employment  
income.  
Section 457(b)—Deferred compensation plans of a state and  
local government and tax-exempt organization.  
Royalties derived in the ordinary course of a section 162 trade  
Amounts paid in consideration for services (for example,  
or business that’s not a passive activity.  
distributions from a foreign retirement plan that are paid in the  
form of an annuity and include investment income that was  
earned by the retirement plan).  
Passive losses of a former passive activity that are allowed as  
a deduction in the current year under section 469(f)(1)(A).  
How your annuities are reported to you. Net investment  
income from annuities is reported to a recipient on Form 1099-R,  
Distributions From Pensions, Annuities, Retirement or  
Profit-Sharing Plans, IRAs, Insurance Contracts, etc. However,  
the amount reported on Form 1099-R may also include annuity  
payments from retirement plans that are exempt from NIIT.  
Amounts subject to NIIT should be identified with code “D” in  
box 7. If code “D” is shown in box 7 of Form 1099-R, include on  
Form 8960, line 3, the taxable amount reported in box 2a of Form  
1099-R. However, if the payor checks box 2b indicating the  
taxable amount can’t be determined, you may need to calculate  
the taxable portion of your distribution. See Pub. 939, General  
Rule for Pensions and Annuities, and Pub. 575, Pension and  
Annuity Income, for details.  
In addition, use line 4b to adjust for certain types of  
nonpassive rental income or loss derived in the ordinary course  
of a section 162 trade or business. For example, line 4b includes  
the following items.  
Nonpassive net rental income or loss of a real estate  
professional where the rental activity rises to a section 162 trade  
or business.  
Net rental income or loss that’s a nonpassive activity because  
it was grouped with a trade or business under Regulations  
section 1.469-4(d)(1). See Special Rules for Certain Rental  
Income, earlier.  
Other rental income or loss from a section 162 trade or  
business reported on Schedule K-1 (Form 1065), Partner's  
Share of Income, Deductions, Credits, etc., line 3, from a  
partnership, or Schedule K-1 (Form 1120-S), Shareholder's  
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Instructions for Form 8960 (2023)  
   
Share of Income, Deductions, Credits, etc., line 3, from an S  
corporation, where the activity isn’t a passive activity.  
Line 5b—Net Gain or Loss From Disposition of  
Property That Isn’t Subject to Net Investment  
Income Tax  
Net income that’s been recharacterized as not from a passive  
activity under the section 469 passive loss rules and is derived in  
the ordinary course of a section 162 trade or business. For  
example:  
1. Net rental income or loss from a rental that meets an  
exception under Regulations section 1.469-1T(e)(3)(ii), the  
activity rises to a section 162 trade or business, and you  
materially participated in the activity; or  
Use line 5b to adjust the amounts included on line 5a for gains  
and losses that are excluded from the calculation of net  
investment income. Enter the amount of gains (as a negative  
number) and losses (as a positive number) included on line 5a  
that are excluded from net investment income. For example,  
line 5b will include amounts such as the following.  
2. Net income from property rented to a nonpassive activity.  
Gain or loss from the sale of property held in a non-section  
1411 trade or business.  
1. However, if the losses are attributable to formerly  
suspended passive losses of the non-section 1411 trade or  
business, such gains and losses are excluded from net  
investment income to the extent the nonpassive income from the  
non-section 1411 trade or business is excluded from net  
investment income. See Regulations section 1.1411-4(g)(8) for  
more information and examples.  
2. Gain or loss from the sale of property held in a  
non-section 1411 trade or business doesn’t include substantially  
appreciated property that’s recharacterized as portfolio income.  
Note. Any income from an estate or trust reported on Part III of  
Schedule E (Form 1040) that excluded net investment income is  
taken into account on line 7. Don’t report those adjustments on  
line 4b.  
For line 4b adjustments, enter net positive amounts as a  
negative adjustment and enter net negative amounts as  
!
CAUTION  
a positive adjustment.  
Lines 5a–5d—Gains and Losses on the  
Dispositions of Property  
Gain attributable to net unrealized appreciation (NUA) in  
Generally, net gain from the disposition of property not used in a  
trade or business and net gain or loss from the disposition of  
property held in a section 1411 trade or business is included in  
net investment income if included in taxable income.  
employer securities held by a qualified plan. See Net gain  
Adjustments to your capital loss carryforwards for items of  
carryforwards, later.  
Gains and losses that aren’t taken into account in computing  
taxable income aren’t taken into account in computing net  
investment income. For example, gain that isn’t taxable by  
reason of section 121 (sale of a principal residence) or section  
1031 (like-kind exchanges) isn’t included in net investment  
income.  
Substantially appreciated property. If an interest in property  
is substantially appreciated at the time of disposition (fair market  
value exceeds 120% of the adjusted basis), any gain from the  
disposition is treated as nonpassive, unless the interest in  
property was used in a passive activity for either:  
these instructions, for assistance in calculating net gain or loss  
includible in net investment income.  
1. 20% of the total period during which you held the interest  
in property; or  
2. The entire 2-year period ending on the date of the  
disposition.  
See Regulations section 1.469-2(c)(2). The recharacterized  
gain may be taken into account under section 1411(c)(1)(A)(iii) if  
the gain is attributable to the disposition of property and  
recharacterized as portfolio income.  
Line 5a—Net Gain or Loss From Disposition of  
Property  
Calculate and enter the amount of net gain or loss from the  
disposition of property by combining the following amounts from  
your properly completed return.  
Net gain attributable to Net Unrealized Appreciation (NUA)  
in employer securities held by a qualified plan. Any gain  
attributable to NUA (within the meaning of section 402(e)(4)) that  
you realize on a disposition of employer securities held by a  
qualified plan is a distribution within the meaning of section  
1411(c)(5) and isn’t included in net investment income. However,  
any gain realized on a disposition of employer securities  
attributable to appreciation in the value of your employer  
securities after the distribution from a qualified plan isn’t a  
distribution within the meaning of section 1411(c)(5) and is  
included in net investment income.  
Form 1040 or 1040-SR, line 7, and Schedule 1 (Form 1040),  
line 4.  
Form 1041, lines 4 and 7.  
Form 1041-QFT, line 3, and the portion of line 4 attributed to  
ordinary gain/(loss).  
Form 1040-NR, the amounts properly reported on the  
attachment to your Form 1040-NR representing the amounts that  
you would enter on Form 1040 or 1040-SR, line 7, and Schedule  
1 (Form 1040), line 4, if you were filing Form 1040 or 1040-SR  
and including net gain or loss only for your period of U.S.  
residency.  
Shareholders of CFCs and QEFs without a section  
1.1411-10(g) election. In the case of a QEF (other than a QEF  
held in a section 1411 trade or business) for which a section  
1.1411-10(g) election isn’t in effect, enter the amount treated as  
long-term capital gain for regular income tax purposes under  
section 1293(a)(1)(B).  
Also, in the case of a disposition of a CFC or QEF (other than  
a CFC or QEF held in a section 1411 trade or business) for  
which a section 1.1411-10(g) election isn’t in effect, enter the  
increase or decrease in the amount of gain or loss for NIIT  
purposes over the amount of gain or loss for regular income tax  
Note. If you incur gain or loss from a disposition that isn’t  
reported as described in the previous paragraph, report it on  
later.  
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Instructions for Form 8960 (2023)  
       
Keep for Your Records  
Lines 5a–5d—Net Gains and Losses Worksheet  
(A)  
(B)  
Total of columns (A)+(B)  
Capital gains/(losses):  
Form 1040 or 1040-SR,  
line 7; Form 1041,  
line 4; Form 1041-QFT,  
line 3; Form 1040-NR,  
statement reflecting  
U.S. residency portion  
of Form 1040 or  
Ordinary gains/  
(losses): Schedule 1  
(Form 1040), line 4;  
Form 1041, line 7;  
Form 1041-QFT,  
portion of line 4  
attributed to ordinary  
gain/(loss); Form  
1040-NR, statement  
reflecting U.S.  
1040-SR, line 7  
residency portion of  
Schedule 1 (Form  
1040), line 4  
Enter  
this  
1.  
2.  
Beginning net gains and losses  
amount  
on line 5a  
Gains and losses excluded from net investment income. Use current year amounts for lines 2a–2g and 2i.  
(a) Enter net gains from the disposition of property used in a  
non-section 1411 trade or business (enter as negative  
amounts):  
(
) (  
)
Name of Trade or Business  
Amount  
(
(
)
)
(b) Enter net losses from the disposition of property used in  
a non-section 1411 trade or business (enter as positive  
amounts):  
Name of Trade or Business  
Amount  
(c) Enter net losses from a former passive activity allowed  
by reason of section 469(f)(1)(A) . . . . . . . . . . . . . . . .  
(d) Gains recognized in the current year for payments  
received on an installment sale obligation or private  
annuity for the disposition of property used in a  
non-section 1411 trade or business . . . . . . . . . . . . . .  
(
(
)
)
(e) Enter the net gain attributable to the net unrealized  
appreciation (NUA) in employer securities . . . . . . . . . .  
(f) In the case of a QEF (other than a QEF held in a section  
1411 trade or business) for which a section 1.1411-10(g)  
election isn’t in effect, enter the amount treated as  
long-term capital gain for regular income tax purposes  
under section 1293(a)(1)(B) . . . . . . . . . . . . . . . . . . . .  
(
)
(g) Enter any other gains and losses included in net  
investment income that aren’t otherwise reported on  
Form 8960 and any other gains and losses excluded  
from net investment income reported on line 5a. (Enter  
excluded gains as a negative number and excluded  
losses as a positive number.) . . . . . . . . . . . . . . . . . . .  
(h) Enter the amount reported on line 2(i) of this worksheet  
from your prior tax year return calculations. Enter as a  
positive number . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(i) If you don’t have a capital loss carryover to next year,  
then skip this line and go to line 2(j). Otherwise, enter the  
lesser of (i)(1) or (i)(2) as a negative amount . . . . . . . .  
(
)
(i)(1) If the sum of the amounts  
entered on lines 2(a)–2(h) and  
line 3(d), column (A), is greater than  
zero, enter that amount here.  
Otherwise, enter -0- on line 2(i) and  
go to line 2(j) . . . . . . . . . . . . . . . . .  
OR  
(i)(2) The amount of capital loss  
carried over to next year (Schedule D  
(Form 1040), line 16, less the amount  
allowed as a current deduction on  
Schedule D (Form 1040), line 21)  
entered as a positive  
number . . . . . . . . . . . . . . . . . . . .  
Enter  
this  
(j) Sum of lines 2(a) through 2(i)  
amount  
on line 5b  
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Instructions for Form 8960 (2023)  
 
Keep for Your Records  
Lines 5a–5d—Net Gains and Losses Worksheet—continued  
(A)  
(B)  
Total of columns (A)+(B)  
Capital gains/(losses):  
Form 1040 or 1040-SR,  
line 7; Form 1041, line 4;  
Form 1041-QFT, line 3;  
Form 1040-NR, statement  
reflecting U.S. residency  
portion of Form 1040 or  
1040-SR, line 7  
Ordinary gains/  
(losses): Schedule 1  
(Form 1040), line 4;  
Form 1041, line 7;  
Form 1041-QFT,  
portion of line 4  
attributed to ordinary  
gain/(loss); Form  
1040-NR, statement  
reflecting U.S.  
residency portion of  
Schedule 1 (Form  
1040), line 4  
3.  
Adjustment for gains and losses attributable to the disposition of interests in partnerships and S corporations  
(a)  
(i) Enter the amount of net gain from the disposition of a  
partnership or S corporation included on line 5a to which  
section 1411(c)(4)(A) applies . . . . . . . . . . . . . . . . .  
Net  
Gains  
(ii) Enter the amount of net gain included in net investment  
income after the application of Regulations section  
1.1411-7. (The sum of columns A and B of line 3(a)(ii)  
must be less than, or equal to, the sum of columns A and  
B of line 3(a)(i).) . . . . . . . . . . . . . . . . . . . . . . . . . .  
(iii) Enter the difference between line 3(a)(i) and line 3(a)  
(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(i) Enter the amount of net loss from the disposition of an  
interest in a partnership or S corporation included on  
line 5a to which section 1411(c)(4)(B) applies . . . . . .  
(b)  
Net  
Losses  
(ii) Enter the amount of net loss included in net investment  
income after the application of Regulations section  
1.1411-7. (The sum of columns A and B of line 3(b)(ii)  
must be less than, or equal to, the sum of columns A and  
B of line 3(b)(i).) . . . . . . . . . . . . . . . . . . . . . . . . . .  
(iii) Enter the difference between line 3(b)(i) and line 3(b)  
(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(c)  
(i) Enter the amount of gain recognized in the current year  
attributable to payments received on an installment sale  
obligation or private annuity that was attributable to the  
disposition of an interest in a partnership or an S  
Deferred  
Sales  
corporation in a year preceding the current year. Also  
report any gain or loss associated with section 736(b)  
payments on this line . . . . . . . . . . . . . . . . . . . . . .  
(ii) Enter the amount of adjustment attributable to such  
gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(iii) Subtract line 3(c)(ii) from line 3(c)(i) . . . . . . . . . . . . .  
(d)  
4.  
Combine the amounts on lines 3(a)(iii), 3(b)(iii), and 3(c)  
Enter this  
amount  
(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
on line 5c  
Sum of items reported on lines 5a–5c  
Enter this  
amount  
Add lines 1, 2(j), and 3(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
on line 5d  
If the amount of gain for NIIT purposes is less than the amount of gain for regular income tax purposes, the entry on line 3(a)(iii), 3(b)(iii),  
or 3(c)(iii) should be a negative number.  
TIP  
If the amount of loss for NIIT purposes is less than the amount of loss for regular income tax purposes, the entry on line 3(a)(iii), 3(b)(iii), or  
3(c)(iii) should be a positive number.  
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Instructions for Form 8960 (2023)  
purposes. However, if the gain is higher (or the loss larger) for  
NIIT purposes compared to regular income tax purposes, in  
which case there’s no impact to the adjustment for capital loss  
carryforwards for NIIT purposes, enter the difference on line 6.  
(1) and deduct from net investment income any amounts  
deducted from income for regular income tax purposes under  
section 1296(a)(2). Use line 6 to make increases or decreases to  
net investment income as a result of this rule (for items that  
aren’t otherwise reflected on Form 8960).  
Adjustments to your capital loss carryforwards. Starting in  
2014, capital loss carryforwards must be adjusted if any sum of  
all capital gain or loss amounts excluded from net investment  
income on lines 5b and 5c was a net loss (the sum of all  
excluded capital losses was greater than the sum of all excluded  
capital gains). Generally, the annual adjustment to your capital  
losses carryforward is the lesser of:  
Section 1291 funds. If you’re subject to the section 1291 rules  
for a PFIC, you’ll include in net investment income any “excess  
distributions that are dividends for NIIT purposes as well as any  
gains that are treated as excess distributions for regular income  
tax purposes.Use line 6 to make the increases to net  
investment income as a result of the application of this rule (for  
items that aren’t otherwise reflected on Form 8960).  
The amount of your capital loss carryforward from the  
previous year (the sum of carryforward amounts reflected on  
Schedule D (Form 1040), Capital Gains and Losses, lines 6 and  
14); or  
CFCs and QEFs with a section 1.1411-10(g) election in ef-  
fect. If you have a section 1.1411-10(g) election in effect for a  
CFC or QEF, you’ll include in net investment income any  
inclusions under section 951(a), 951A, or 1293(a) derived from  
the CFC or QEF. Inclusions under section 1293(a)(1)(B) may be  
reported elsewhere on Form 8960, such as on line 5a. Use line 6  
to make the increases to net investment income as a result of the  
application of this rule (for items that aren’t otherwise reflected  
on Form 8960).  
The amount of excluded capital losses in excess of excluded  
capital gain in the previous year.  
these instructions, for assistance with the calculation of capital  
loss carryforwards. In addition, see Proposed Regulations  
section 1.1411-4(d)(4)(iii) for more information and a  
comprehensive example of the application of this rule.  
Note. If you included in income an amount under section 951(a)  
or section 1293(a) for a CFC or QEF in 2013 and made an  
election under Regulations section 1.1411-10(g) after 2013 for  
that CFC or QEF, special rules may apply to certain distributions  
of previously taxed income from the CFC or QEF that aren’t  
subject to regular income tax. For more information, see  
Regulations section 1.1411-10.  
Pass-through entities. If you hold an interest in a pass-through  
entity, the determination of whether a trade or business exists is  
made at that entity's level.  
Line 5c—Adjustment From Disposition of  
Partnership Interest or S Corporation Stock  
CFCs and QEFs without a section 1.1411-10(g) election in  
effect. If you don’t have a section 1.1411-10(g) election in effect  
for a CFC or QEF, you’ll generally include in net investment  
income certain distributions of previously taxed income from the  
CFC or QEF that aren’t subject to regular income tax. In addition,  
other special rules may apply, including rules that provide, as  
applicable, alternative basis calculations for your basis in the  
CFC or QEF, or your basis in a domestic partnership or S  
corporation that owns the interest in the CFC or QEF. Also, the  
amount of investment interest expense you take into account for  
NIIT purposes may be increased or decreased from the amount  
taken into account for regular income tax purposes. (For  
additional information on all of these rules, see Regulations  
section 1.1411-10.) As a result of these rules, you may need to  
include amounts in net investment income that aren't otherwise  
reported on Form 8960 or make adjustments to amounts  
reported elsewhere on Form 8960. For example, you may need  
to include distributions from a CFC or a QEF in net investment  
income. Use line 6 to make increases or decreases to net  
investment income as a result of the application of this rule (for  
items that aren’t otherwise reflected on Form 8960).  
Enter the amount from the worksheet for lines 5a–5d, line 3d.  
Attach a statement as described in Required statements, earlier,  
to your return for the year of the disposition.  
Line 6—Adjustments to Investment Income for  
Certain CFCs and PFICs  
If you own stock, directly or indirectly, in a CFC or a PFIC (other  
than certain CFCs and PFICs held in a section 1411 trade or  
business or PFICs marked to market under a provision of Code  
chapter 1 other than section 1296), use line 6 for adjustments  
necessary to calculate your net investment income.  
Income from investments in CFCs and PFICs is generally  
included in the calculation of net investment income and, in  
many cases, will be included (in whole or in part) on other lines  
of Form 8960. Generally, dividends from a CFC or a PFIC that  
are included in your regular income tax base are included on  
Form 8960, line 2, and gains and losses derived from the stock  
of a CFC or a PFIC that are included in your regular income tax  
base are generally included on Form 8960, line 5. Also, income  
derived from CFCs and certain PFICs you hold in a section 1411  
trade or business is generally reported on Form 8960, line 4a.  
Note. Use line 5b to deduct inclusions under section 1293(a)(1)  
(B) that are allowed on line 5a, or to adjust the amount of gain or  
loss derived from the disposition of shares of a CFC or QEF.  
However, if the gain included in net investment income is higher  
than the amount reported for regular income tax (or the loss is  
greater), report the adjustment on line 6.  
Line 6 is used for adjustments that are the result of additional  
rules. These additional rules may apply when you own an  
interest in a CFC or PFIC and may require you to subtract or add  
amounts not otherwise included on Form 8960. These additional  
rules vary depending on the set of anti-deferral rules that apply  
to you for regular income tax purposes, and for CFCs and QEFs,  
and depending on whether you have a Regulations section  
1.1411-10(g) election in effect for the CFC or QEF. For more  
information about determining the amount to report on line 6, see  
Regulations section 1.1411-10.  
Note. Even if you don’t have a section 1.1411-10(g) election in  
place for a CFC or QEF, there are certain instances in which  
distributions to you from the CFC or QEF may not be subject to  
NIIT. For example, if a prior holder of the CFC or QEF had made  
a section 1.1411-10(g) election for that CFC or QEF and you  
receive a distribution of earnings and profits that were previously  
included in the net investment income of the prior holder, you  
may not be subject to NIIT on that distribution. For more  
information, see Regulations section 1.1411-10.  
Section 1296 mark-to-market PFICs. Generally, if you’re  
subject to the section 1296 mark-to-market rules for a PFIC,  
you’ll include in net investment income any amounts included in  
income for regular income tax purposes under section 1296(a)  
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Instructions for Form 8960 (2023)  
     
Line 7—Other Modifications to Investment Income  
Form 8814 election. Parents electing to include their child's  
dividends and capital gain distributions in their income by filing  
Form 8814 include on Form 8960, line 7, the amount on Form  
8814, line 12, excluding Alaska Permanent Fund Dividends.  
Use line 7 to report additional net investment income  
modifications to net investment income that aren’t otherwise  
specified on lines 1–6. For example, use line 7 to report additions  
and modifications to net investment income, such as the  
following.  
Distributions from estates and trusts. Enter the amount from  
box 14, code H, of Schedule K-1 (Form 1041), Beneficiary's  
Share of Income, Deductions, Credits, etc.  
Section 1411 net operating loss (NOL) (enter as a negative  
amount). See Section 1411 NOL, later.  
Note. If the amount reported in box 14, code H, of Schedule K-1  
(Form 1041) is a positive number, enter it on Form 8960, line 7,  
and increase your MAGI on Form 8960, line 13 (or Form 8960,  
line 19a) by the same amount.  
If the amount reported in box 14, code H, of Schedule K-1  
(Form 1041) is a negative number, and the trust has indicated  
some (or all) of the adjustment also requires a MAGI adjustment,  
enter it on Form 8960, line 7, and make the applicable increase  
or decrease to your MAGI on Form 8960, line 13 (or Form 8960,  
line 19a) as necessary.  
Any deductions described in section 62(a)(1) that are properly  
allocable to a passive activity or trading business, but aren’t  
taken into account on line 4a or 5a (enter as a negative amount).  
Adjustments for distributions from estates and trusts. See  
Section 404(k) dividends reported on line 2 (enter as a  
negative amount). See Line 2—Ordinary Dividends, earlier.  
Interest income reported on line 1 received from certain  
nonpassive activities (entered as a negative amount). See  
Section 1411 NOL. If you are allowed an NOL deduction under  
section 172 for purposes of determining your regular income tax,  
you may also be allowed some, or all, of the NOL deduction in  
computing net investment income. Because NOLs are computed  
and carried over year by year, you must determine for each NOL  
year what portion of the NOL is attributable to net investment  
income. To determine how much of the accumulated NOL you  
can use in the current tax year as a deduction against your net  
investment income, you must first calculate your applicable  
portion of the NOL for each loss year. For more information and  
examples on the calculation of a section 1411 NOL and its use,  
see Regulations section 1.1411-4(h).  
Recoveries of deductions taken on a prior year's Form 8960.  
See Deduction recoveries, later.  
Other items of net investment income (or properly allocable  
deductions) not otherwise included on Form 8960 reported on  
Schedule 1 (Form 1040), line 8z; Form 1041, line 8; Form  
1041-QFT, lines 4 and 9; Form 1040-NR, amount on statement  
reporting tax items for your period of U.S. residency  
corresponding to Schedule 1 (Form 1040), line 8z. For example,  
these items could include the following.  
1. Amounts reported on Form 8814, Parents' Election To  
Report Child's Interest and Dividends, line 12. See Form 8814  
election, later.  
Note. No portion of an NOL incurred in a tax year beginning  
before 2013 is permitted to reduce net investment income.  
Calculating your section 1411 NOL. In any tax year in  
which a taxpayer incurs an NOL, the section 1411 NOL is the  
lesser of:  
2. Substitute interest and dividend payments (generally  
reported on Form 1099-MISC, Miscellaneous Information).  
3. Net positive periodic payments received from a notional  
principal contract (NPC) that’s referenced to property (including  
an index) that produces (or would produce, if the property were  
to produce income) interest, dividends, royalties, or rents. For  
example, an interest rate swap, cap, or floor and an equity swap  
would be treated as an NPC that produces net investment  
income.  
The amount of the NOL for the loss year the taxpayer would  
incur if only items of gross income that are used to determine net  
investment income and only properly allocable deductions (other  
than a section 1411 NOL) are taken into account in determining  
the NOL under section 172, or  
Gains and losses from the disposition of property not included  
The amount of the taxpayer's NOL for the loss year.  
on line 5a that are taken into account in computing taxable  
income. For example:  
For purposes of calculating the section 1411 NOL,  
compute your NOL using Form 1045, Application for  
Tentative Refund, Schedule A—NOL, with only items of  
TIP  
1. Gain or loss from the disposition of an annuity or life  
insurance contract (see Line 3—Annuities, earlier); and  
income, gain, loss, and deduction on Form 8960 for that year. If  
this amount is less than your NOL computed for regular income  
tax purposes, then this amount is the applicable portion of your  
NOL. If this amount is equal to, or greater than, your NOL  
computed for regular income tax purposes, then your applicable  
portion is 100% of the regular income tax NOL (which means the  
entire NOL will be deductible in computing net investment  
income when the NOL is used for regular income tax purposes).  
2. Casualty and theft losses reported on Schedule A (Form  
1040), Itemized Deductions, line 15 (enter as a negative  
amount).  
However, gains and losses attributable to assets held in a  
non-section 1411 trade or business aren’t included in net  
investment income. For more information, see Line 5b—Net  
Using your section 1411 NOL. When you deduct an NOL  
that originated in a previous year against the current year  
income, a portion of the NOL may be deductible in computing  
net investment income for the current year, regardless of whether  
you’re subject to the NIIT in the current year without the NOL  
deduction. The amount of the regular income tax NOL used in  
calculating net investment income is called the “applicable  
portion.The applicable portion is the percentage of the regular  
income tax NOL that’s a section 1411 NOL. Because NOLs are  
calculated on a year-by-year basis, the applicable portion of  
each NOL that’s used in the current year may be different.  
Other section 62(a)(1) deductions. Use line 7 to report  
additional deductions attributable to a section 1411 trade or  
business that aren’t included on lines 4–6. Generally, these  
deductions are above-the-line deductions reported on Schedule  
1 (Form 1040), lines 11–25.  
Note. Expenses associated with the trade or business of trading  
in financial instruments or commodities that are reported on your  
Schedule C (Form 1040) are reported on Form 8960, line 10.  
commodities, later.  
Note. If you incurred an NOL after 2012 and carried back that  
Note. Early withdrawal penalty (Schedule 1 (Form 1040),  
NOL to offset income in years preceding the imposition of the  
line 18) is reported on Form 8960, line 10.  
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Instructions for Form 8960 (2023)  
         
Example: Calculation of Section 1411 NOL for NIIT  
Assume an unmarried individual incurs the following NOLs and has waived any potential carryback for each passing year under  
section 172(b)(3), and assume that carryforwards are not limited:  
(C) Applicable Portion of NOL  
[column B divided by column A]  
NOL Origination Year  
(A) Regular Income Tax NOL  
(B) Section 1411 NOL  
2018 Calendar Year  
2019 Calendar Year  
2020 Calendar Year  
2021 Calendar Year  
$150,000  
$100,000  
$40,000  
None  
0.00%  
30.0%  
100%  
50.0%  
$30,000  
$40,000  
$60,000  
$120,000  
Beginning in 2022, the unmarried individual begins to use the NOLs to offset income:  
Tax Year  
NOL Origination Year  
Regular Income  
$300,000  
Applicable Portion  
Section 1411 NOL  
2022 Tax Year  
2018 NOL  
2019 NOL  
2020 NOL  
2021 NOL  
($150,000)  
($100,000)  
($40,000)  
0.00%  
30.0%  
100.0%  
50.0%  
None  
($30,000)  
($40,000)  
($5,000)  
($75,000)  
($10,000)  
Total section 1411 NOL allowed as deduction against 2022 net investment income . . . . . . . . . . . . . .  
In 2022, the regular income tax NOLs from 2018–2021 have caused the taxpayer’s AGI ($0) to fall below the statutory threshold; therefore,  
the individual isn’t subject to the NIIT.  
Tax Year  
NOL Origination Year  
Regular Income  
$600,000  
Applicable Portion  
Section 1411 NOL  
2023 Tax Year  
2021 NOL  
($110,000)  
50.0%  
($55,000)  
Total section 1411 NOL allowed as deduction against 2023 net investment income . . . . . . . . . . . . . .  
($55,000)  
In 2023, the regular income tax NOL remaining from 2021 has reduced the taxpayer’s income for regular income tax to $490,000. The  
individual is entitled to reduce net investment income by $55,000 (entered as a negative amount on Form 8960, line 7).  
NIIT (for example, a carryback to calendar year 2011 and/or  
2012), the amount of section 1411 NOL that was included in the  
NOL carryback would’ve been used (as an applicable portion)  
even though the NIIT wasn’t in effect.  
There are two exceptions to including recovered amounts in  
net investment income. The two exceptions apply the tax benefit  
rule of section 111 within the NIIT system, and therefore operate  
independently of the application of section 111 for Code  
chapter 1 purposes. First, properly allocable deductions aren’t  
reduced in the year of the recovery if the amount deducted in the  
prior year didn’t reduce the amount of section 1411 liability.  
Second, properly allocable deductions aren’t reduced in the year  
of the recovery if the amount deducted in the prior year is  
included in net investment income.  
these instructions, for an illustration of the calculation and use of  
a section 1411 NOL for NIIT purposes.  
Deduction recoveries. A recovery or refund of a previously  
deducted item increases net investment income in the year of  
the recovery. There are two exceptions to this general rule.  
Note. The total amount of recovery reported on Form 8960,  
line 7, can’t exceed the total amount of properly allocable  
deductions for the year.  
Generally, for purposes of determining the gross amount of  
the recovery, include the recovery of any amount that was  
deducted in a prior year, regardless of the application of the tax  
benefit rule (see section 111). For example, if a taxpayer  
receives a refund of state income taxes from a prior year, such a  
refund would be included in the taxpayer's gross income.  
However, if the taxpayer was subject to the alternative minimum  
tax in the year of the payment, the taxpayer may not have  
received any tax benefit under chapter 1 of the Code, and  
therefore section 111 may exclude some or all of the refund from  
gross income. However, the deductibility of state income taxes  
for NIIT is independent of the taxes for alternative minimum tax  
purposes. Therefore, the applicability of the recovery rule is  
determined without regard to whether the recovered amount was  
excluded from gross income by reason of section 111.  
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Instructions for Form 8960 (2023)  
   
If the recovered amount relates to a deduction taken in a  
tax year beginning before 2013, none of the recovery is  
included in net investment income in the year of  
If the recovered amount is included in net investment  
income on lines 1–6, none of the recovery is included in  
net investment income on line 7.  
TIP  
TIP  
recovery.  
See Regulations section 1.1411-4(g)(2) for more information  
these instructions, to determine the amount of any recovery to  
include on line 7.  
If the recovered amount relates to a deduction taken in a  
tax year beginning after 2012 and you weren’t subject to  
TIP  
the NIIT because your MAGI (see Line 13—Modified  
Adjusted Gross Income (MAGI), later, was below the applicable  
threshold on line 14, then none of the recovery is included in net  
investment income in the year of recovery. However, this rule  
doesn’t apply if you incurred an NOL in the year of the deduction,  
and a portion of your NOL is a section 1411 NOL.  
In the case of multiple recoveries in a single year,  
complete this worksheet for each recovery. If multiple  
recoveries relate to a single deduction year, the amount  
TIP  
reported on lines 8 and 9 of the first recovery worksheet will  
become lines 7 and 10, respectively, on the second recovery  
worksheet.  
Keep for Your Records  
Line 7—Deduction Recoveries Worksheet  
1. Enter total amount of recovery included in gross income . . . . . . . . . . . . . . . 1.  
Don’t include recoveries of items that are included in net investment  
income in the year of recovery (included on lines 1–6).  
Don’t include recoveries of items if the amount relates to a deduction  
taken in a tax year beginning before 2013.  
Don’t include recoveries of items if the amount relates to a deduction  
taken in a tax year beginning after 2012, and you weren’t subject to the  
NIIT solely because your MAGI was below the applicable threshold.  
This rule doesn’t apply if you incurred an NOL in such year, and a portion  
of such NOL constitutes a section 1411 NOL.  
!
CAUTION  
2. Amount of the recovery that would’ve been included in gross income,  
except for the application of the tax benefit rule under section 111 . . . . . . 2.  
3. Total amount of recovery (add lines 1 and 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.  
4. Enter the percentage of the deduction allocated to net investment income  
in the prior year. (If the deduction wasn’t allocated between investment  
income and noninvestment income, enter 100%.) . . . . . . . . . . . . . . . . . . . . . 4.  
5. Enter the lesser of (a) line 3 multiplied by line 4, or (b) the total amount deducted  
on the prior year Form 8960 attributable to items recovered (after any deduction  
limitations imposed by section 67 or 68) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.  
Calculation of recoveries when the deduction isn’t taken into account in computing your section 1411 NOL  
6. Multiply line 5 by 3.8% (0.038) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.  
7. Enter the amount of net investment income in the year of the deduction  
(previous year’s Form 8960, line 12, unless line 12 is zero, then previous  
year's Form 8960, line 8 minus line 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.  
8. Add the amount on line 5 to line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.  
9. Using the previous year's Form 8960, recalculate the NIIT for the year of  
the deduction by replacing the amount reported on line 12 with the  
amount reported on line 8 of this worksheet (don’t use the net investment  
income reported on that year's Form 8960, line 12). Enter your  
recalculated NIIT here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.  
10. Enter the NIIT reported for the year of the deduction . . . . . . . . . . . . . . . . . . .  
11. Subtract line 10 from line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.  
12. Enter the smaller of line 6 or line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.  
10.  
13. Divide line 12 by 3.8% (0.038). Enter the result here and include on  
Form 8960, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.  
Calculation of recoveries when the deduction is taken into account in computing your section 1411 NOL  
14. Enter the amount of the section 1411 NOL in the year of the deduction  
(entered as a positive number) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.  
15. Enter the amount of the section 1411 NOL in the year of the deduction  
recomputed without the amount on line 5 (entered as a positive number,  
but not less than zero) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.  
16. Subtract line 15 from line 14. Enter the result here and include on  
Form 8960, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.  
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Instructions for Form 8960 (2023)  
 
If you have more than one of the deductions described above,  
you may use a different method of allocation for each one. The  
reasonable method of allocation may differ from year to year.  
Examples of reasonable methods of allocation include, but  
aren’t limited to, an allocation of the deduction based on the ratio  
of the amount of a taxpayer's gross investment income (Form  
8960, line 8) to the amount of the taxpayer's AGI. In the case of  
an estate or trust, an allocation of a deduction under Regulations  
section 1.652(b)-3(b), and in the case of an ESBT, Regulations  
section 1.641(c)-1(h), is also a reasonable method.  
Self-charged interest. The self-charged interest rules under  
section 469 (passive activity loss limitation) apply to lending  
transactions between a taxpayer and a pass-through entity in  
which the taxpayer owns a direct or indirect interest, or between  
certain pass-through entities. The section 469 self-charged  
interest rules apply only to items of interest income and interest  
expense that are recognized in the same tax year. The  
self-charged interest rules:  
Treat certain interest income resulting from these lending  
transactions as passive activity income,  
Treat certain deductions for interest expense that are properly  
Note. If an estate or trust allocates expenses for regular income  
tax purposes under Regulations section 1.652(b)-3(b) or  
1.641(c)-1(h), any deviation from that allocation may not be a  
reasonable allocation method for NIIT purposes.  
allocable to the interest income as passive activity deductions,  
and  
Allocate the passive activity gross income and passive activity  
deductions resulting from this treatment among the taxpayer's  
activities.  
Items not deductible in calculating net investment income.  
Unless a deduction is specifically identified as properly allocable  
to net investment income in the section 1411 regulations, or in  
supplemental guidance issued by the IRS in the Internal  
Revenue Bulletin, the deduction isn’t permitted.  
The rules for computing net investment income adopt a  
similar rule for self-charged interest. See Regulations section  
1.1411-4(g)(5). Include on line 7 (as a negative amount) the  
amount of interest income you received that’s equal to the  
amount of interest income that would’ve been considered  
passive income under the self-charged interest rules  
(Regulations section 1.469-7) had the nonpassive activity been  
considered a passive activity.  
Line 9a—Investment Interest Expense  
Enter on Form 8960, line 9a, interest expense you paid or  
accrued during the tax year deducted on Schedule A (Form  
1040), line 9. Estates and trusts enter the amount from Form  
4952, line 8 (if not required to file Form 4952, use the form as a  
worksheet). For individuals filing a Form 1040-NR, include only  
the amount of investment interest expense deduction for your  
U.S. residency period.  
Note. This rule doesn’t apply to interest received on loans made  
to a trade or business engaged in the trading of financial  
instruments or commodities.  
Note. Don’t include any adjustment for interest income on line 7  
(as a negative amount) if the corresponding interest deduction is  
also taken into account in determining your self-employment  
income that’s subject to tax under section 1401(b).  
Note. If Form 4952 includes investment interest expense that’s  
deducted on Schedule E (Form 1040) and already taken into  
account on line 4a, don’t include the same amount on line 9a.  
Part II—Investment Expenses  
Allocable to Investment Income and  
Modifications  
Note. If you own a CFC or QEF for which a section 1.1411-10(g)  
election isn’t in effect, you may calculate your section 163(d)  
investment expense deduction for NIIT purposes differently than  
for regular income tax purposes. See Regulations section  
1.1411-10(c)(5) for additional guidance. Any modification to your  
section 163(d) investment expense deduction for NIIT purposes  
is taken into account on line 6.  
Investment Expenses  
Part II of Form 8960 includes deductions and modifications to  
net investment income that aren’t otherwise included in Part I.  
Generally, expenses associated with a passive activity trade or  
business, or the trade or business of trading in financial  
Line 9b—State, Local, and Foreign Income Tax  
instruments or commodities conducted through a pass-through  
entity are already included on line 4a or on line 5a. Part II is used  
to report deductions that are, predominately, itemized  
Include state, local, and foreign income taxes you paid for the tax  
year that are attributable to net investment income. Form  
1040-NR filers include only taxes paid for the U.S. residency  
period of the tax year. Sales taxes aren’t deductible in computing  
net investment income. You may not take a deduction for any  
foreign income taxes paid for the tax year if you took a credit for  
any portion of them. See section 275(a)(4).  
deductions. For more information on what constitutes properly  
allocable deductions, see Regulations sections 1.1411-4(f)–(g).  
Reasonable method allocations. To the extent that you have  
a properly allocable deduction that’s allocable to both net  
investment income and excluded income, you may use any  
reasonable method to determine that portion of the deduction  
that’s properly allocable to net investment income. The three  
items that may be allocated between net investment income and  
excluded income are the following.  
You can determine the portion of your state, local, and foreign  
income taxes allocable to net investment income using any  
reasonable method. See Reasonable method allocations,  
67 or section 68, later.  
State, local, and foreign income taxes if properly deducted on  
your return when calculating your U.S. regular income tax.  
All ordinary and necessary expenses paid or incurred during  
Miscellaneous itemized deductions are suspended for  
the tax year to determine, collect, or obtain a refund of any tax  
owed if properly deducted on your return when calculating your  
U.S. regular income tax.  
tax years 2018 through 2025. Miscellaneous itemized  
!
CAUTION  
deductions under section 67 aren’t allowed for tax years  
beginning after 2017 and before 2026. See section 67(g).  
Amounts paid or incurred by the fiduciary of an estate or trust  
on account of administration expenses, including fiduciaries'  
fees and expenses of litigation, which are ordinary and  
necessary in connection with the performance of the duties of  
administration if properly deducted on your return when  
calculating your U.S. regular income tax.  
The overall limitation on itemized deductions is also  
suspended for tax years 2018 through 2025. The overall  
limitation on itemized deductions under section 68 doesn’t apply  
for tax years beginning after 2017 and before 2026. See section  
68(f).  
-14-  
Instructions for Form 8960 (2023)  
       
We continue to discuss miscellaneous itemized deductions  
under section 67 (and the 2%-of-AGI limitation) and the overall  
limitation on itemized deductions under section 68; however,  
they are suspended for tax years 2018 through 2025.  
instruments or commodities, you may use the net loss amount  
on your Schedule C (Form 1040) as a deduction on line 10, and  
you don’t need to complete Schedule SE (Form 1040),  
Self-Employment Tax.  
If you have more than one trade or business, you must  
complete Schedule SE (Form 1040) to determine whether you  
can include some or all of the trading business Schedule C  
(Form 1040) expenses as a deduction on line 10. Complete the  
Note. Enter the amount of state, local, or foreign income taxes  
on Form 8960, line 9b, net of any deduction limitations imposed  
Investment Income Worksheet in these instructions for  
assistance in figuring the amount to report on line 9b.  
Note. See the Instructions for Schedule SE (Form 1040) for who  
must file a Schedule SE (Form 1040). Retain a copy of the  
Schedule SE (Form 1040) and the worksheet used to determine  
the expenses included as a modification on line 10 with your  
records. Don’t file the worksheet with Form 1040 or 1040-SR.  
Line 9c—Miscellaneous Investment Expenses  
Investment expenses you incur that are directly connected to the  
production of investment income are deductible expenses in  
determining your net investment income. Generally, these  
amounts are reported on Form 4952, line 5. See Form 4952 for  
the instructions for line 5 for more information. The amounts  
reported on line 9c are the amounts allowable after the  
application of the deduction limitations imposed by sections 67  
and 68.  
section 68, later.  
Note. Enter the amount of miscellaneous investment expenses  
on Form 8960, line 9c, net of any deduction limitations imposed  
by section 67 or section 68. See Lines 9 and 10—Application of  
for assistance in figuring the amount to report on line 9c.  
See Caution regarding miscellaneous itemized deductions,  
earlier.  
Don’t include expenses that have been deducted on  
other lines of the Form 8960, such as depletion or  
depreciation reported on Schedule E (Form 1040) and  
TIP  
included on Form 8960, line 4a.  
Dual-status individuals include only tax items related to their  
period of U.S. residency. See Dual-status individual, earlier.  
DO NOT use the following worksheet to calculate  
limitations for tax years beginning after 2017 and before  
!
CAUTION  
2026.  
See Caution regarding miscellaneous itemized deductions,  
earlier.  
Line 10—Additional Modifications  
Use line 10 to report additional deductions and modifications to  
net investment income that aren’t otherwise reflected on lines 1–  
9. Enter amounts on line 10 as positive numbers.  
Note. Enter the amount on line 10 after the application of  
Investment Income Worksheet in these instructions for  
assistance in figuring the amount to report on line 10.  
See Caution regarding miscellaneous itemized deductions,  
earlier.  
You may use line 10 to report properly allocable deductions.  
See Regulations sections 1.1411-4(f) and 1.1411-4(g) for  
details.  
Special rule for traders in financial instruments or com-  
modities. If your only business is trading in financial  
-15-  
Instructions for Form 8960 (2023)  
 
Lines 9 and 10—Application of Itemized Deduction Limitations  
on Deductions Properly Allocable to Investment Income  
Worksheet  
Keep for Your Records  
Part I—Application of Section 67 to Deductions Properly Allocable to Investment Income  
1. Enter the amount of Miscellaneous Itemized Deductions properly allocable to  
investment income before any itemized deduction limitations (description and  
Form 8960 line number where they’ll be reported):  
Description  
Line  
Amount  
(a)  
(b)  
2. Enter the total of all items listed in line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
2.  
3.  
3. Enter the amount of Miscellaneous Itemized Deductions shown on your current  
return after the application of the section 67 2%-of-AGI limitation . . . . . . . . . . . .  
4. Enter the lesser of the total reported on line 2 or line 3 . . . . . . . . . . . . . . . . . . . .  
4.  
Part II—Application of Section 67 Limitation to Specific Deductions  
(B)  
IF line 3 is less than  
line 2, THEN divide  
line 3 by line 2 AND  
enter the amount in  
column (B).  
IF amounts reported  
on Part I, lines 2 and  
4, are equal, THEN  
enter 1.00 in column  
(B).  
(C)  
Multiply the  
individual  
amounts in  
column (A) by  
the amount in  
column (B).  
(A)  
Re-enter the amounts and descriptions from Part I, line 1.  
Description  
Line  
Amount  
(a)  
(b)  
x
x
=
=
Individuals—Use the amounts in column (C) on Part III, line 1, to determine the amount of these deductions that are allowable  
after the application of the section 68 limitation.  
TIP  
Estates or trusts—Enter the amounts in column (C) in the appropriate location on lines 9 and 10. Don’t complete Part III or IV  
of this worksheet.  
-16-  
Instructions for Form 8960 (2023)  
 
Lines 9 and 10—Application of Itemized Deduction Limitations  
on Deductions Properly Allocable to Investment Income  
Worksheet—continued  
Keep for Your Records  
Part III—Application of Section 68 to Deductions Properly Allocable to Investment Income (Individuals Only)  
1. Enter the amount of Miscellaneous Itemized Deductions properly allocable to  
investment income from column (C) of Part II:  
Description  
Line  
Amount  
(a)  
(b)  
2. Enter the amount of state, local, and foreign income taxes that are properly  
allocable to investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
2.  
3. Enter the amounts of other Itemized Deductions subject to the section 68  
limitation and properly allocable to investment income before any itemized  
deduction limitations (description and Form 8960 line number where they’ll be  
reported):  
Description  
Line  
Amount  
(a)  
(b)  
4. Enter the total deductions properly allocable to investment income subject to the section 68 limitation. Enter  
the sum of lines 1 through 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.  
5. Enter the amount of total itemized deductions reported on Form 1040 or  
1040-SR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
5.  
6. Enter all other itemized deductions allowed but not subject to the section 68  
deduction limitation:  
(a) Investment Interest Expense . . . . . . . . . . . . . . . . . . . . .  
(b) Casualty Losses (other than losses described in section  
165(c)(1)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(c) Medical Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(d) Gambling Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(e) Total of lines 6(a) through 6(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
6(e).  
7. Subtract line 6(e) from line 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.  
8. Enter the lesser of line 7 or line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.  
This is the amount of itemized deductions that are properly allocable to investment income after the application of the sections 67  
TIP  
and 68 deduction limitations. Use Part IV of this worksheet to reconcile this amount to the individual deduction amounts reported  
on Form 8960, lines 9 and 10.  
-17-  
Instructions for Form 8960 (2023)  
Lines 9 and 10—Application of Itemized Deduction Limitations  
on Deductions Properly Allocable to Investment Income  
Worksheet—continued  
Keep for Your Records  
Part IV—Reconciliation of Schedule A Deductions to Form 8960, Lines 9 and 10 (Individuals Only)  
(B)  
IF Part III, line 8, is  
less than Part III,  
(C)  
line 4, THEN divide  
line 8 by line 4  
Multiply the  
individual  
AND enter the  
amount in column  
(B).  
IF the amounts  
reported on Part III,  
lines 4 and 8, are  
equal, THEN enter  
1.00 in column (B).  
amounts in  
column (A) by the  
amount in column  
(B). Enter these  
amounts in the  
appropriate  
(A)  
Re-enter the amounts and descriptions from Part III, lines 1–  
3.  
locations on lines  
9 and 10.  
Miscellaneous Itemized Deductions properly  
allocable to investment income:  
Description  
Line  
Amount  
1.  
(a)  
(b)  
×
×
×
=
=
=
2. State, local, and foreign income taxes . . . . . . . . . .  
Itemized Deductions Subject to Section 68  
Included on Line 3 of Part III:  
3.  
(a)  
(b)  
×
×
=
=
-18-  
Instructions for Form 8960 (2023)  
The amounts reported on line 10 are the amounts allowable  
after the application of the deduction limitations imposed by  
sections 67 and 68, as applicable. See Deductions subject to  
See Caution regarding miscellaneous itemized deductions,  
earlier.  
Part III—Tax Computation  
Deductions subject to AGI limitations under section 67 or  
section 68. Any deduction allowed against net investment  
income that, for purposes of computing your regular income tax,  
is subject to either the 2% floor on miscellaneous itemized  
deductions (section 67) or the overall limitation on itemized  
deductions (section 68) is allowed in determining net investment  
income, but only to the extent the items are deductible after  
application of both limitations.  
Individuals  
Individuals complete lines 13–17.  
Line 13—Modified Adjusted Gross Income (MAGI)  
If you didn’t exclude any amounts from your gross income under  
section 911 and you don’t own a CFC or PFIC, your MAGI is your  
AGI as reported on Form 1040 or 1040-SR. If you exclude  
amounts under section 911 or own certain CFCs or PFICs, your  
MAGI is your AGI as modified by certain rules described in  
Regulations section 1.1411-10(e)(1).  
See Caution regarding miscellaneous itemized deductions,  
earlier.  
Miscellaneous itemized deductions. The amount of your  
miscellaneous itemized deductions, after application of the 2%  
floor but before application of the overall limitation, used in  
determining your net investment income is the lesser of:  
Section 911. If you exclude amounts from income under  
section 911, to calculate your MAGI, you must increase your AGI  
by the excess of the amount excluded from income under  
section 911(a)(1) over the amount of any deductions (taken into  
account in computing AGI) or exclusions disallowed under  
section 911(d)(6) for the amount excluded from income under  
section 911(a)(1). Use Line 13—MAGI Worksheet in these  
instructions to compute your MAGI.  
That portion of your miscellaneous itemized deductions  
before the application of the 2% floor that’s properly allocable to  
net investment income, or  
Your total miscellaneous itemized deductions allowed after the  
application of the 2% floor but before the application of the  
overall limitation on itemized deductions.  
See Caution regarding miscellaneous itemized deductions,  
CFCs and PFICs. If you own, directly or indirectly, stock in a  
CFC or PFIC other than certain CFCs and PFICs held in a  
section 1411 trade or business or PFICs marked to market under  
section 1296 or any other provision, to calculate your MAGI, you  
may need to make certain adjustments to your AGI, as provided  
in Regulations section 1.1411-10(e)(1). Generally, these  
adjustments include the following.  
earlier.  
Itemized deductions. The amount of your itemized  
deductions allowed in determining your net investment income  
after applying both the 2% floor and the overall limitation is the  
lesser of:  
The sum of :  
1. The amount of your miscellaneous itemized deductions  
1291 funds.  
allowed as a deduction against your net investment income  
(before application of the overall limitation), and  
1. Increase AGI by the amount of any excess distributions  
derived from a PFIC that are dividends included in MAGI but not  
included in gross income for regular income tax purposes, and  
2. The total amount of your itemized deductions that aren’t  
subject to the 2% floor and are properly allocable to items of  
income or net gain for purposes of determining your net  
investment income; or  
2. Increase AGI by the amount of any gain treated as an  
excess distribution under section 1291 included in MAGI but not  
included in gross income for regular income tax purposes.  
The total amount of your itemized deductions allowed after the  
CFCs and QEFs without a section 1.1411-10(g) election in  
application of both the 2% floor and the overall limitation on  
itemized deductions.  
effect.  
1. Decrease AGI by the amount of any section 951(a), 951A,  
or 1293(a) inclusions;  
For more information and examples, see Regulations section  
1.1411-4(f)(7).  
Line 10—Worksheet for Traders in Financial Instruments That  
Maintain More Than One Trade or Business  
Keep for Your Records  
Use this worksheet to determine the amount on line 10.  
1. Enter the total amount from Schedule SE (Form 1040), line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
1.  
2. (a) If the amount on Schedule SE (Form 1040), line 3, is zero or greater, you can’t use the  
expenses from your trade or business to reduce your investment income. Stop here.  
(b) If the amount on Schedule SE (Form 1040), line 3, is a negative amount, enter your  
expenses from your trade or business of trading in financial instruments or commodities  
(entered as a positive amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2(b).  
3. Add line 1 to line 2(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
3.  
(a) If the amount on line 3 of this worksheet is zero or less, include the trade or business  
expenses (line 2(b) of the worksheet) on Form 8960, line 10.  
(b) If the amount on line 3 of this worksheet is a positive number, convert the amount from  
Schedule SE (Form 1040), line 3 (line 1 of this worksheet) into a positive number and  
include it on Form 8960, line 10.  
-19-  
Instructions for Form 8960 (2023)  
       
Keep for Your Records  
Line 13—MAGI Worksheet  
1. Enter your Adjusted Gross Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.  
2. Foreign Earned Income Exclusion:  
(a) Enter your Foreign Earned Income Exclusion (from  
line 42 of Form 2555) . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(b) Enter the deductions reported on line 44 of Form  
2555 allocable to your Foreign Earned Income  
Exclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
(
)
(c) Combine lines 2(a) and 2(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.  
Adjustments for certain CFCs and certain PFICs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.  
3.  
4. Enter the sum of line 1, line 2(c), and line 3. (Enter this amount on Form 8960,  
line 13.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.  
2. Increase AGI by the amount of any distributions described  
in section 959(d) or 1293(c) included in your net investment  
income as a dividend;  
3. Increase or decrease AGI (as appropriate) by the amount  
of any adjustment to gain or loss on the disposition of the CFC or  
QEF that results in an adjustment to your MAGI;  
4. Increase or decrease AGI (as appropriate) by the amount  
of any adjustment to gain or loss on the disposition of an interest  
in a domestic partnership or S corporation that holds a CFC or  
QEF that results in an adjustment to your MAGI;  
5. Increase or decrease AGI (as appropriate) by the amount  
of any adjustment to investment interest expense under  
Regulations section 1.1411-10(c)(5) that’s taken into account in  
computing MAGI; and  
NRA spouse. Note that if you made a section 6013(g) or 6013(h)  
election to file jointly with your NRA spouse, but don’t also elect  
to apply the joint return election for NIIT purposes, then, for NIIT  
purposes, you’ll file as married filing separately and need to use  
the applicable threshold amount.  
Line 17—Net Investment Income Tax for  
Individuals  
Form 1040 or 1040-SR filers: Include this amount on  
Schedule 2 (Form 1040), line 12, and see the instructions there.  
Form 1040-NR filers: Include this amount on the line of your  
U.S. residency statement corresponding to Schedule 2 (Form  
1040), line 12, and see the Instructions for Form 1040-NR for the  
amount to report on your tax return.  
6. Increase or decrease AGI (as appropriate) by the amount  
reported to you in box 14, code H, of Schedule K-1 (Form 1041)  
that requires a MAGI adjustment.  
See Dual-status individual, earlier.  
CFCs and QEFs held in a section 1411 trade or business or  
Estates and Trusts  
with a section 1.1411-10(g) election in effect.  
Estates and trusts complete lines 18–21.  
Increase AGI by the amount of any distributions described in  
section 959(d) or 1293(c) included in your net investment  
income as a dividend (not applicable to tax years beginning  
before 2014).  
Line 18b—Deductions for Distributions of Net  
Investment Income and Charitable Deductions  
If you don’t own (directly or indirectly) any interests in  
The undistributed net investment income of an estate or trust  
(reported on line 18c) equals its net investment income (reported  
on line 18a) reduced by the net investment income included in  
the distributions to beneficiaries deductible by the estate or trust  
under section 651 or 661, and by the net investment income for  
which the estate or trust was entitled to a section 642(c)  
deduction, in each case as calculated under Regulations section  
1.642(c)-2 and the allocation and ordering rules under  
Regulations section 1.662(b)-2. In the case of the S portion of an  
Electing Small Business Trust, as defined by section 1361(e),  
net investment income is further reduced by the net investment  
income for which the trust was entitled to a section 170  
deduction. See Section 641(c)(2)(E).  
CFCs or PFICs, and don’t exclude any foreign earned  
income on Form 2555, Foreign Earned Income, enter  
TIP  
your AGI from Form 1040 or 1040-SR on line 13.  
Line 14—Threshold Based on Filing Status  
The threshold amount is based on your filing status.  
Filing Status  
Threshold Amount  
$250,000  
Married Filing Jointly  
Qualifying Surviving Spouse  
Married Filing Separately  
Single or Head of Household  
$250,000  
$125,000  
$200,000  
Regulations section 1.1411-3(e) applies the class system of  
income categorization, generally embodied in sections 651  
through 663 and related regulations, to arrive at the trust's net  
investment income reduction in the case of distributions that are  
comprised of both net investment income and net excluded  
income items. See Regulations section 1.1411-3(e) for more  
information and examples on the calculation of undistributed net  
investment income.  
A bankruptcy estate of an individual enters $125,000 and  
uses Form 8960, lines 13–17, to compute the tax.  
If you’re a U.S. citizen or resident married to an NRA, your  
filing status is married filing separately unless you made an  
election under section 6013(g) or 6013(h) to file jointly with your  
Charitable deduction. Report the amount of net investment  
income distributed to beneficiaries of the estate or trust and the  
-20-  
Instructions for Form 8960 (2023)  
       
amount of net investment income allocated to distributions to  
charity pursuant to section 642(c). The amount of the deduction  
for net investment income distributed to charities under section  
642(c) is the amount of the net investment income allocated to  
the charity in accordance with Regulations section 1.642(c)-2(b)  
and the allocation and ordering rules under Regulations section  
1.662(b)-2. In the case of the S portion of an Electing Small  
Business Trust, as defined by section 1361(e), report the amount  
of net investment income distributed to beneficiaries of the  
estate or trust and the amount of net investment income  
allocated to distributions to charity pursuant to section 170. See  
Section 641(c)(2)(E).  
which the highest tax bracket begins for the tax year and enter  
that amount here.  
In the case of a QFT, see Special computational rules for  
qualified funeral trusts (QFTs), earlier, to determine the amount  
to report on Form 8960, line 19b.  
Line 21—Net Investment Income Tax for Estates  
and Trusts  
Form 1041 filers: Include this amount on Form 1041,  
Schedule G, line 5, and see the instructions there.  
Form 1041, Schedule A, can be used as a worksheet to  
Form 1041-QFT filers: Include this amount on Form  
calculate the amounts of net investment income  
TIP  
1041-QFT, line 15, and see the instructions there.  
allocable to charitable distributions by including on line 2  
both tax-exempt income and the difference between adjusted  
total income and the trust's net investment income (Form 8960,  
line 18a).  
Paperwork Reduction Act Notice. We ask for the information  
on this form to carry out the Internal Revenue laws of the United  
States. You are required to give us the information. We need it to  
ensure that you are complying with these laws and to allow us to  
figure and collect the right amount of tax.  
The amount of the deduction for net investment income  
distributed to beneficiaries should equal the sum of net  
investment income reported to the beneficiaries on their  
TIP  
You are not required to provide the information requested on  
a form that is subject to the Paperwork Reduction Act unless the  
form displays a valid OMB control number. Books or records  
relating to a form or its instructions must be retained as long as  
their contents may become material in the administration of any  
Internal Revenue law. Generally, tax returns and return  
respective Schedules K-1 (Form 1041).  
Note. In general, the deduction for distributions of net  
investment income may not exceed the taxable income  
distributed to the beneficiary for regular income tax purposes.  
However, in the case of an estate or trust that owns an interest in  
certain CFCs or PFICs, the distribution of net investment income  
can exceed the distribution of taxable income when the amount  
of distributions exceeds distributable net income for regular  
income tax purposes.  
information are confidential, as required by section 6103.  
The time needed to complete and file this form will vary  
depending on individual circumstances. The estimated average  
time is:  
Form 1041, Schedule B, can be used as a worksheet to  
calculate the income distribution deduction for NIIT  
purposes by replacing line 1 with the trust's net  
TIP  
Recordkeeping . . . . . . . . . . . . . .  
Learning about  
the law or the form . . . . . . . . . . .  
1 hr., 01 min.  
investment income (Form 8960, line 18a) and including on line 2  
both adjusted tax-exempt interest and the difference between  
line 1 and the trust's net investment income (Form 8960,  
line 18a).  
6 hr., 04 min.  
1 hr., 47 min.  
Preparing the form . . . . . . . . . . .  
Copying, assembling,  
and sending the form  
to the IRS . . . . . . . . . . . . . . . . . .  
20 min.  
Line 18c—Undistributed Net Investment Income  
Don’t enter a negative number. If negative, enter zero.  
Comments and suggestions. We welcome your comments  
about this publication and your suggestions for future editions.  
Line 19a—Adjusted Gross Income (AGI)  
You can send us comments through IRS.gov/  
FormComments. Or, you can write to: Internal Revenue Service,  
Tax Forms and Publications, 1111 Constitution Ave. NW,  
IR-6526, Washington, DC 20224. DO NOT SEND THE FORM  
TO THIS ADDRESS.  
If the estate or trust doesn’t own a CFC or PFIC, enter its AGI for  
regular income tax purposes.  
If the estate or trust owns a CFC or PFIC, it may need to make  
(MAGI), earlier.  
Although we can't respond individually to each comment  
received, we do appreciate your feedback and will consider your  
comments as we revise our tax forms, instructions, and  
publications. We can't answer tax questions sent to the above  
address.  
Line 19b—Highest Tax Bracket for Estates and  
Trusts  
See the instructions for Form 1041, Schedule G, line 1a, and the  
instructions for Form 1041-QFT, line 12, for the dollar amount at  
-21-  
Instructions for Form 8960 (2023)  
Index  
D
I
P
Deduction recoveries 12  
Definitions 1  
Income Threshold, Estates and  
Passive Activity 3  
Trusts 20  
Income Thresholds, Individuals 20  
Index 22  
R
Disposition of Interest 4  
Disposition of Property, gains and  
Recordkeeping 1  
losses 7  
Individuals, application of Net  
Investment tax 2  
S
Instruments or Commodities 5  
E
Section 1291 10  
Economic Grouping 4  
Section 1411 Net Operating Loss 11  
Self-charged Interest 14  
J
Election for Reg 1.1411–10(g) 5  
Election, Form 8814 11  
Joint-filed returns 2  
Elections for Investment Income 5  
T
M
Estates and Trusts, application of Net  
Tax Computation 19  
Investment tax 2  
Mark-to-market, Passive Foreign  
Expenses of Investments 14  
Investment Company 10  
-22-