#### § 1.1411-0 Table of contents of provisions applicable to section 1411.

This section lists the table of contents for §§ 1.1411-1 through 1.1411-10.

## § 1.1411-1 General rules.

(a) General rule.

(b) Adjusted gross income.

(c) Effect of section 1411 and the regulations thereunder for other purposes.

(d) Definitions.

(e) Disallowance of certain credits against the section 1411 tax.

(f) Application to taxable years beginning before January 1, 2014.

(1) Retroactive application of regulations.

(2) Reliance and transitional rules.

(g) Effective/applicability date.

## § 1.1411-2 Application to individuals.

(a) Individual to whom tax applies.

(1) In general.

(2) Special rules.

(i) Dual resident individuals treated as residents of a foreign country under an income tax treaty.

(ii) Dual-status resident aliens.

(iii) Joint returns in the case of a nonresident alien individual married to a United States citizen or resident.

(A) Default treatment.

(B) Taxpayer election.

(*1*) Effect of election.

(*2*) Procedural requirements for making election.

(*3*) Ineffective elections.

(iv) Joint returns for a year in which nonresident alien married to a United States citizen or resident becomes a United States resident.

(A) Default treatment.

(B) Taxpayer election.

(*1*) Effect of election.

(*2*) Procedural requirements for making election.

(v) Grantor trusts.

(vi) Bankruptcy estates.

(vii) Bona fide residents of United States territories.

(A) Applicability.

(B) Coordination with exception for nonresident aliens.

(C) Definitions.

(*1*) Bona fide resident.

(*2*) United States territory.

(b) Calculation of tax.

(1) In general.

(2) Example.

(c) Modified adjusted gross income.

(1) General rule.

(2) Rules with respect to CFCs and PFICs.

(d) Threshold amount.

(1) In general.

(2) Taxable year of less than twelve months.

(i) General rule.

(ii) Change of annual accounting period.

(e) Effective/applicability date.

## § 1.1411-3 Application to Estates and Trusts

(a) Estates and trusts to which tax applies.

(1) In general.

(i) General application.

(ii) Calculation of tax.

(2) Taxable year of less than twelve months.

(i) General rule.

(ii) Change of annual accounting period.

(3) Rules with respect to CFCs and PFICs.

(b) Application to certain trusts and estates.

(1) Exception for certain trusts and estates.

(2) Special rules for certain taxable trusts and estates.

(i) Qualified funeral trusts.

(ii) Bankruptcy estates.

(c) Application to electing small business trusts (ESBTs).

(1) General application.

(2) Computation of tax.

(i) Step one.

(ii) Step two.

(iii) Step three.

(3) Example.

(d) Application to charitable remainder trusts (CRTs).

(1) Operational rules.

(i) Treatment of annuity or unitrust distributions.

(ii) Apportionment among multiple beneficiaries.

(iii) Accumulated net investment income.

(2) Application of section 664.

(i) General rule.

(ii) Special rules for CRTs with income from CFCs or PFICs [Reserved]

(iii) Examples.

(3) Elective simplified method. [Reserved]

(e) Calculation of undistributed net investment income.

(1) In general.

(2) Undistributed net investment income.

(3) Distributions of net investment income to beneficiaries.

(4) Deduction for amounts paid or permanently set aside for a charitable purpose.

(5) Examples.

(f) Effective/applicability date.

## § 1.1411-4 Definition of Net Investment Income

(a) In general.

(b) Ordinary course of a trade or business exception.

(c) Other gross income from a trade or business described in § 1.1411-5.

(d) Net gain.

(1) Definition of disposition.

(2) Limitation.

(3) Net gain attributable to the disposition of property.

(i) General rule.

(ii) Examples.

(4) Gains and losses excluded from net investment income.

(i) Exception for gain or loss attributable to property held in a trade or business not described in § 1.1411-5.

(A) General rule.

(B) Special rules for determining whether property is held in a trade or business.

(C) Examples.

(ii) Adjustments to gain or loss attributable to the disposition of interests in a partnership or S corporation.

(iii) Adjustment for capital loss carryforwards for previously excluded income. [Reserved]

(e) Net investment income attributable to certain entities.

(1) Distributions from estates and trusts.

(i) In general.

(ii) Distributions of accumulated net investment income from foreign nongrantor trusts to United States beneficiaries. [Reserved]

(2) CFCs and PFICs.

(3) Treatment of income from common trust funds. [Reserved]

(f) Properly allocable deductions.

(1) General rule.

(i) In general.

(ii) Limitations.

(2) Properly allocable deductions described in section 62.

(i) Deductions allocable to gross income from rents and royalties.

(ii) Deductions allocable to gross income from trades or businesses described in § 1.1411-5.

(iii) Penalty on early withdrawal of savings.

(iv) Net operating loss.

(v) Examples.

(3) Properly allocable deductions described in section 63(d).

(i) Investment interest expense.

(ii) Investment expenses.

(iii) Taxes described in section 164(a)(3).

(iv) Items described in section 72(b)(3).

(v) Items described in section 691(c).

(vi) Items described in section 212(3).

(vii) Amortizable bond premium.

(viii) Fiduciary expenses.

(4) Loss deductions.

(i) General rule.

(ii) Examples.

(5) Ordinary loss deductions for certain debt instruments.

(6) Other deductions.

(7) Application of limitations under sections 67 and 68.

(i) Deductions subject to section 67.

(ii) Deductions subject to section 68.

(iii) Itemized deductions.

(iv) Example.

(g) Special rules.

(1) Deductions allocable to both net investment income and excluded income.

(2) Recoveries of properly allocable deductions.

(i) General rule.

(ii) Recoveries of items allocated between net investment income and excluded income.

(iii) Recoveries with no prior year benefit.

(iv) Examples.

(3) Deductions described in section 691(b).

(4) Amounts described in section 642(h).

(5) Treatment of self-charged interest income.

(6) Treatment of certain nonpassive rental activities.

(i) Gross income from rents.

(ii) Gain or loss from the disposition of property.

(7) Treatment of certain real estate professionals.

(i) Safe harbor.

(ii) Definitions.

(A) Participation.

(B) Rental real estate activity.

(iii) Effect of safe harbor.

(8) Treatment of former passive activities.

(i) Section 469(f)(1)(A) losses.

(ii) Section 469(f)(1)(C) losses.

(iii) Examples.

(9) Treatment of section 469(g)(1) losses.

(10) Treatment of section 707(c) guaranteed payments. [Reserved]

(11) Treatment of section 736 payments. [Reserved]

(12) Income and deductions from certain notional principal contracts. [Reserved]

(13) Treatment of income or loss from REMIC residual interests. [Reserved]

(h) Net operating loss.

(1) In general.

(2) Applicable portion of a net operating loss.

(3) Section 1411 NOL amount of a net operating loss carried to and deducted in a taxable year.

(4) Total section 1411 NOL amount of a net operating loss deduction.

(5) Examples.

(i) Effective/applicability date.

## § 1.1411-5 Trades and Businesses to Which Tax Applies

(a) In general.

(b) Passive activity.

(1) In general.

(2) Application of income recharacterization rules.

(i) Income and gain recharacterization.

(ii) Gain recharacterization.

(iii) Exception for certain portfolio recharacterizations.

(3) Examples.

(c) Trading in financial instruments or commodities.

(1) Definition of financial instruments.

(2) Definition of commodities.

(d) Effective/applicability date.

## § 1.1411-6 Income on Investment of Working Capital Subject to Tax

(a) General rule.

(b) Example.

(c) Effective/applicability date.

## § 1.1411-7 Exception for Dispositions of Certain Active Interests in Partnerships and S Corporations [Reserved]

## § 1.1411-8 Exception for Distributions From Qualified Plans

(a) General rule.

(b) Rules relating to distributions.

(1) Actual distributions.

(2) Amounts treated as distributed.

(3) Amounts includible in gross income.

(4) Amounts related to employer securities.

(i) Dividends related to employer securities.

(ii) Amounts related to the net unrealized appreciation in employer securities.

(c) Effective/applicability date.

## § 1.1411-9 Exception for Self-Employment Income

(a) General rule.

(b) Special rule for traders.

(c) Examples.

(d) Effective/applicability date.

## § 1.1411-10 Controlled Foreign Corporations and Passive Foreign Investment Companies

(a) In general.

(b) Amounts derived from a trade or business described in § 1.1411-5.

(1) In general.

(2) Coordination rule for changes in trade or business status.

(c) Calculation of net investment income.

(1) Dividends.

(i) Distributions of previously taxed earnings and profits.

(A) Rules when an election under paragraph (g) of this section is not in effect with respect to the shareholder.

(*1*) General rule.

(*2*) Exception for distributions attributable to earnings and profits previously taken into account for purposes of section 1411.

(B) Rule when an election under paragraph (g) of this section is in effect with respect to the shareholder.

(C) Special rule for certain distributions related to 2013 taxable years.

(*1*) Scope.

(*2*) Rule.

(*3*) Ordering rule.

(ii) Excess distributions that constitute dividends.

(2) Net gain.

(i) Gains treated as excess distributions.

(ii) Inclusions and deductions with respect to section 1296 mark to market elections.

(iii) Gain or loss attributable to the disposition of stock of CFCs and QEFs.

(iv) Gain or loss attributable to the disposition of interests in domestic partnerships or S corporations that own directly or indirectly stock of CFCs or QEFs.

(3) Application of section 1248.

(4) Amounts distributed by an estate or trust.

(5) Properly allocable deductions.

(i) General rule.

(ii) Additional rules.

(d) Conforming basis adjustments.

(1) Basis adjustments under sections 961 and 1293.

(i) Stock held by individuals, estates, or trusts.

(ii) Stock held by domestic partnerships or S corporations.

(A) Rule when an election under paragraph (g) of this section is not in effect.

(B) Rules when an election under paragraph (g) of this section is in effect.

(2) Special rules for partners that own interests in domestic partnerships that own directly or indirectly stock of CFCs or QEFs.

(3) Special rules for S corporation shareholders that own interests in S corporations that own directly or indirectly stock of CFCs or QEFs.

(4) Special rules for participants in common trust funds.

(e) Conforming adjustments to modified adjusted gross income and adjusted gross income.

(1) Individuals.

(2) Estates and trusts.

(f) Application to estates and trusts.

(g) Election with respect to CFCs and QEFs.

(1) Effect of election.

(2) Years to which election applies.

(i) In general.

(ii) Termination of interest in CFC or QEF.

(iii) Termination of partnership.

(3) Who may make the election.

(4) Time and manner for making the election.

(i) Individuals, estates, and trusts.

(A) General rule.

(B) Special rule for charitable remainder trusts (CRTs).

(ii) Certain domestic passthrough entities.

(iii) Taxable years that begin before January 1, 2014.

(A) Individuals, estates, or trusts.

(B) Certain domestic passthrough entities.

(iv) Time for making election.

(h) Examples.

(i) Effective/applicability date.

[T.D. 9644, 78 FR 72422, Dec. 2, 2013, as amended at 79 FR 18160, Apr. 1, 2014]