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IRS Draft Form 8960 on Net Investment Income Addresses CRTs

Thursday, August 8, 2013
The Internal Revenue Service's just-released 2013 draft Form 8960, which beneficiaries of charitable remainder trusts and others will use to compute the new 3.8 percent surtax on net investment income, accounts for the fact that not all items reported on a beneficiary's Schedule K-1 meet the definition of net investment income subject to the tax, Ted Batson, an executive vice president at Renaissance Administration LLC in Indianapolis, told BNA Aug. 7.
Some items on the schedule may be grandfathered dollars that beneficiaries do not need to pay tax on, Batson said.
Therefore IRS has allowed for an adjustment, described in the draft instructions to the 2013 Schedule K-1, which carries on to Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, so that beneficiaries can reduce the net investment income amounts reported there by the grandfathered amount, Batson said.
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