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Net Investment Income Tax / K-1 Dividend Income

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Level 3

I have an S Corp K-1 (NOT passive) with dividend income on it.  The corporation is a service corporation that bought P&G stock which is where the dividend came from.  The corp is not in the banking business.  I have the boxed check to indicate the K-1 is not subject to net investment tax.  Why is the dividend showing up on Form 8960 line 2?  The dividend was generated from an active business. Do I need to override this or is it correct and the dividend is still considered net investment income because it is a dividend?  Thanks!

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Level 15

Dividends from a pass-through still retain the same character of that income.  That's why it's subject to NIIT.

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Level 15

Dividends from a pass-through still retain the same character of that income.  That's why it's subject to NIIT.

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Still an AllStar

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Level 3

That makes sense.  Thank you!

 

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Level 15

NP, @taxlady2008!

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Still an AllStar
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