Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Friday, July 12, 2013

Articles on the Medicare Contribution Tax

LewisLewis Saret (Federal Tax Attorney, Washington D.C.) recently published a few articles  on the medicare contribution tax entitled,The 3.8 Percent Medicare Contribution Tax and  The 3.8 Percent Medicare Contribution Proposed Regulation Part I and Part II, The Estate Planner, (Jan. 2013),( Mar. 2013), & (May. 2013). Provided below is the introduction to the latest article:

This is the second part of a two-part series1 that address the proposed regulations that provide guidance with respect to Code Sec. 1411. Code Sec. 1411 imposes a 3.8-percent tax on net investment income for individuals, trusts and estates. This column resumes where the first part ended.

 Note. As of the date that this column was submitted for publication, several comments have  been submitted to the Treasury Department concerning the proposed regulations, some of  which are extensive. Attached as an Appendix to this column is a list of issues raised in  such comments, along with cites to the comments submitted to the Treasury.

 Application to Estates and Trusts

In addition to placing a 3.8-percent tax on certain individuals, Code Sec. 1411 also applies a 3.8-percent net investment income tax on estates and trusts. This tax is determined by applying a 3.8 percent tax for a tax year on the lesser of: the estate’s or trust’s Undistributed Net Investment Income (UNII), or the estate’s or trust’s Adjusted Gross Income (AGI) above a threshold. The threshold amount is the dollar amount that begins the highest tax bracket for a particular year and is currently approximately $11,950.2 Code Sec. 1411 provides that AGI for estates and trusts, as for individuals, is defi ned in Code Sec. 67(e).


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