Question

Net passive income is included with net investment income and, therefore, may be subject to the 3.8% additional tax on net investment income.

a) True
b) False

Answer 1

Net passive income is included with net investment income and may be subject to the 3.8% additional tax.

Step-by-step explanation:

The statement is true.

Net passive income is included with net investment income, which means it may be subject to the 3.8% additional tax on net investment income. Net passive income includes income derived from passive activities such as rental income, royalties, and dividends.

For example, if a taxpayer earns $10,000 in rental income and has no other net investment income, this $10,000 would be subject to the 3.8% additional tax if the taxpayer's modified adjusted gross income exceeds the threshold amount set by the IRS.