Code Sec. 1411 Material Participation by Trusts: The IRS Audit Position

This series of posts concludes the continued discussion begun in prior series dealing with the Code Sec. 1411, 3.8-percent net investment income tax (NIIT). It specifically discusses material participation of trusts and estates, concluding the discussion begun in earlier posts. Recall that to the extent that a trust or estate receives income from an activity in a trade or business in which the trust or estate materially participates, such trust or estate avoids the NIIT.