Instructions For Form 8960 (2015) (Page 9 of 20) in pdf

2. Gain or loss from the sale of

1411 trade or business is generally

Adjustments to your capital loss carry-

property held in a non-section 1411 trade

reported on Form 8960, line 4a.

forwards. Starting in 2014, capital loss

or business does not include substantially

carryforwards must be adjusted if any sum

Line 6 is used for adjustments that are

appreciated property that is

of all capital gain or loss amounts

the result of additional rules. These

recharacterized as portfolio income. See

excluded from net investment income on

additional rules may apply when you own

Substantially appreciated

property, later.

lines 5b and 5c was a net loss (the sum of

an interest in a CFC or PFIC and may

all excluded capital losses was greater

Gain attributable to net unrealized

require you to subtract or add amounts not

than the sum of all excluded capital gains).

appreciation (NUA) in employer securities

otherwise included on Form 8960. These

Generally, the annual adjustment to your

held by a qualified plan. See

Net gain

additional rules vary depending on the set

capital losses carryforward is the lesser of:

attributable to NUA in employer securities

of anti-deferral rules that apply to you for

The amount of your capital loss

held by a qualified

plan, later.

regular income tax purposes, and for

carryforward from the previous year (the

Adjustments to your capital loss

CFCs and QEFs, and depending on

sum of carryforward amounts reflected on

carryforwards for items of excluded loss.

whether you have a section 1.1411-10(g)

Schedule D (Form 1040), Capital Gains

See

Adjustments to your capital loss

election in effect for the CFC or QEF. For

and Losses, lines 6 and 14, or

carryforwards, later.

more information about determining the

The amount of excluded capital losses

amount to report on line 6, see

Substantially appreciated property.

in excess of excluded capital gain in the

Regulations section 1.1411-10.

Generally, Regulations section 1.469-2(c)

previous year.

(2)(iii)(A) provides that if an interest in

Section 1296 mark–to–market PFICs.

See

Lines 5a-5d — Net Gains and Losses

property previously used in a nonpassive

Generally, if you are subject to the section

Worksheet, earlier, for assistance with the

activity but not used in a passive activity

calculation of capital loss carryforwards. In

1296 mark–to–market rules for a PFIC,

for more than 2 years prior to disposition is

addition, see Proposed Regulations

you will include in net investment income

substantially appreciated at the time of

section 1.1411-4(d)(4)(iii) for more

any amounts included in income for

disposition, any gain from the disposition

regular income tax purposes under

information and a comprehensive example

is treated as not from a passive activity.

section 1296(a)(1) and deduct from net

of the application of this rule.

The recharacterized gain may be taken

investment income any amounts deducted

Pass-through entities. If you hold an

into account under section 1411(c)(1)(A)

from income for regular income tax

interest in a pass-through entity, the

(iii) if the gain is attributable to the

purposes under section 1296(a)(2). Use

determination of whether a trade or

disposition of property and

line 6 to make increases or decreases to

business exists is made at that entity's

recharacterized as portfolio income.

net investment income as a result of this

level.

rule (for items that are not otherwise

Net gain attributable to NUA in em-

reflected on Form 8960).

ployer securities held by a qualified

Line 5c—Adjustment From

plan. Any gain attributable to NUA (within

Section 1291 funds. If you are subject to

Disposition of Partnership Interest

the meaning of section 402(e)(4)) that you

the section 1291 rules for a PFIC, you will

or S Corporation Stock

realize on a disposition of employer

include in net investment income any

securities held by a qualified plan is a

“excess distributions that are dividends for

Enter the amount from the worksheet for

distribution within the meaning of section

NIIT purposes as well as any gains that

lines 5a-5d, Part II, line 3d. Attach a

1411(c)(5) and is not included in net

are treated as excess distributions for

statement as described in

Required

investment income. However, any gain

regular income tax purposes.” Use line 6

statements, earlier, to your return for the

realized on a disposition of employer

to make the increases to net investment

year of the disposition.

securities attributable to appreciation in

income as a result of the application of this

the value of your employer securities after

rule (for items that are not otherwise

Line 6—Adjustments to

the distribution from a qualified plan is not

reflected on Form 8960).

a distribution within the meaning of section

Investment Income for Certain

CFCs and QEFs with a section

1411(c)(5) and is included in net

CFCs and PFICs

1.1411-10(g) election in effect. If you

investment income.

have a section 1.1411-10(g) election in

If you own stock, directly or indirectly, in a

Shareholders of CFCs and QEFs with-

effect for a CFC or QEF, you will include in

CFC or a PFIC (other than certain CFCs

out a section 1.1411-10(g) election. In

net investment income any inclusions

and PFICs held in a section 1411 trade or

the case of a QEF (other than a QEF held

under section 951(a) or 1293(a) derived

business or PFICs marked to market

in a section 1411 trade or business) for

from the CFC or QEF. Inclusions under

under a provision of IRC chapter 1 other

which a section 1.1411-10(g) election is

section 1293(a)(1)(B) may be reported

than section 1296), use line 6 for

not in effect, enter the amount treated as

elsewhere on Form 8960, such as on

adjustments necessary to calculate your

long-term capital gain for regular income

line 5a. Use line 6 to make the increases

net investment income.

tax purposes under section 1293(a)(1)(B).

to net investment income as a result of the

Income from investments in CFCs and

application of this rule (for items that are

Also, in the case of a disposition of a

PFICs is generally included in the

not otherwise reflected on Form 8960).

CFC or QEF (other than a CFC or QEF

calculation of net investment income and,

held in a section 1411 trade or business)

Note. If you included in income an

in many cases, will be included (in whole

for which a section 1.1411-10(g) election

amount under section 951(a) or section

or in part) on other lines of Form 8960.

is not in effect, enter the increase or

1293(a) for a CFC or QEF in 2013 and

Generally, dividends from a CFC or a

decrease in the amount of gain or loss for

made an election under Regulations

PFIC that are included in your regular

NIIT purposes over the amount of gain or

section 1.1411-10(g) after 2013 for that

income tax base are included on Form

loss for regular income tax purposes.

CFC or QEF, special rules may apply to

8960, line 2, and gains and losses derived

However, if the gain is higher (or the loss

certain distributions of previously taxed

from the stock of a CFC or a PFIC that are

larger) for NIIT purposes compared to

income from the CFC or QEF that are not

included in your regular income tax base

regular income tax purposes, in which

subject to regular income tax. For more

generally are included on Form 8960,

case there is no impact to the adjustment

information, see Regulations section

line 5. Also, income derived from CFCs

for capital loss carryforwards for NIIT

1.1411-10.

and certain PFICs you hold in a section

purposes, enter the difference on line 6.

Instructions for Form 8960 (2015)

-9-

Instructions For Form 8960 (2015) Page 9

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