The net investment income tax, with its flat 3.8 percent rate, is the first tax imposed outside of the regular income tax in several decades. Although the net investment income tax has been part of the tax law since its enactment within PPACA, it had a delayed effective date for tax years beginning after December 31, 2012. As a result, the tax is now effective for most taxpayers for the first time for taxable years beginning after December 31, 2012. The net investment income tax unfortunately had a delayed response from the IRS in issuing the guidance needed to comply fully with the law and to fully plan effectively to avoid the tax when possible. Upon completion of this course, you will be able to: understand the rationale behind Congress's enactment of the net investment income tax and the IRS' response to writing rules and regulations to implement this new tax; determine the income levels at which the 3.8 percent net investment income tax is triggered; identify the particular groups of taxpayers that are subject to, and those that are exempt from, the net investment income tax; identify the three categories of net investment income that are subject to the net investment income tax; explain the interrelationships between the passive activity loss rules of Code Sec. 469 and the net investment income tax rules of Code Sec. 1411; understand when rental income is subject to net investment income tax and when it may be exempt; and determine circumstances under which losses and other deductions are allowed to offset only net investment gain and when offset of all three categories of net investment income may be allowed.