Can someone please help me with a reclass question for a K1? I don’t understand when income is passive or non passive when listed in 11zz. Should all income be subject to NIIT if partner is not materially participating?

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11zz can be any income. There should be a statement disclosing what it is. It could be passive or non passive depending on what it is. And yes generally all income would be subject to NIIT to a partner who is not materially participating. Assuming the partner is not getting guaranteed payments for services.

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Thank you. We have a reclass worksheet and it was confusing. It makes sense it’s all subject to NIIT. I just have to break out between passive and non passive. Some K1s state if it’s passive and some do not.

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Unless otherwise stated, items in 11zz are usually non passive and Subject to NIIT. If it's income taxed at different rates (i.e. qualified dividends and capital gains) then you would need to reclass.

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