Instructions For Form 5227 - 2016 Page 15
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20Section 664 Method
SNIIC Election Method
First, net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Not Applicable
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), and finally
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
(d)
A net loss from all the other long-term capital gain class that is Excluded Income (20% rate) reduces net gains in the following order:
First, net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
First, net gain from the
28% long-term capital
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
gain class, then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Gain from the section
1250 long-term capital
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), and finally
gain class.
Net gain from all the other long-term capital gain class that is NII (23.8% rate).
2.
Among the short-term and long-term gain and loss classes:
(a)
A net short-term capital loss that is NII (43.4% rate) is applied to reduce the net short-term and net long-term capital gain classes as follows:
First, short-term capital gain class that is Excluded Income (39.6% rate), then
First, net gain from the
28% long-term capital
Net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
gain class, then
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
Gain from the section
1250 long-term capital
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
gain class, and finally
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), then
Net gain from all the other long-term capital gain class that is NII (23.8% rate), and finally
Net gain from all the other
long-term capital gain
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
class.
(b)
A net short-term capital loss that is Excluded Income (39.6% rate) is applied to reduce the net short-term and net long-term capital gain classes
as follows:
First, short-term capital gain class that is NII (43.4% rate), then
Net gain from the 28% long-term capital gain class that is NII (31.8% rate), then
First, net gain from the
28% long-term capital
Gain from the section 1250 long-term capital gain class that is NII (28.8% rate), then
gain class, then
Net gain from the 28% long-term capital gain class that is Excluded Income (28% rate), then
Gain from the section
1250 long-term capital
Gain from the section 1250 long-term capital gain class that is Excluded Income (25% rate), then
gain class, and finally
Net gain from all the other long-term capital gain class that is NII (23.8% rate), and finally
Net gain from all the other
long-term capital gain
Net gain from all the other long-term capital gain class that is Excluded Income (20% rate).
class.
3.
An overall net long-term capital loss reduces any net short-term capital gain as follows:
First, any net short-term capital gain that is NII (43.4% rate), then
Overall net long-term
capital loss reduces any
Any net short-term capital gain that is Excluded Income (39.6% rate)
net short-term capital
gain.
and undistributed long-term capital gain, the short-term
Ordering rules for capital gains and losses. The
capital gain is deemed distributed before any long-term
following rules apply to undistributed long-term capital gains
capital gain.
on assets held more than 1 year. If, in any tax year of the
trust, the trust has both undistributed short-term capital gain
Ordering Rules for Capital Gains and Losses
Section 664 Method
SNIIC Election Method
1. Any short-term capital gains are deemed to be distributed in the following order:
First, short-term capital gain class that is NII (43.4% rate), then
Short-term capital gains
Short-term capital gain class that is Excluded Income (39.6% rate)
2. Any long-term capital gains are deemed to be distributed in the following order:
The 28% long-term capital gain class that is NII (31.8% rate) is deemed distributed, then
The 28% long-term capital
gain class is deemed
The section 1250 long-term capital gain class that is NII (28.8% rate) is deemed distributed, then
distributed, then
-15-
Instructions for Form 5227
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