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Tax News
Net Investment Tax Proposed Regs are Out!
December 11, 2012
Administrative Actions
I am a bit late to the party since the regulations actually came out a few days ago, but nonetheless, I wanted to share my first impressions. These have been long awaited by the community and they do not disappoint. One hundred and fifty nine pages, including the preamble, but I am not going to belabor the point of complexity and volume; I have been ruminating complexity enough on this blog. Per my preliminary review, the proposed regulations cover many of the points that the community expected them to cover, e.g. issues related to attribution of manager’s business, CFC/PFIC issues, annuity/private insurance issues and so on.  In a few words, the guidance represents a super compressive project that seems to drive the key point home that fund managers and investors do not get any break. While this is not necessarily surprising, it may be disappointing to some proponents of various planning solutions that in light of these regulations, now may seem moot. My observations here are not all encompassing though. The result may not necessarily be an automatic 3.8% tax for some specialized industries such as mezzanine lending and real estate but I have yet to vet this since I have not fully made sense of the 159 pager. Will keep you updated as I, and many more practitioners, come in terms with these Regs.
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Tags: net investment tax, NIIT, proposed 1411 regulations, Section 1411