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My question is: Can I exclude installment sale from NIIT? As I read the instruction for Form 8960 page 7, line 2 says "Gains and losses excluded from net investment income" and part d of line 2 reads "Gains recognized in the current year for payments received on an installment sale obligation". It looks as if installment sales can be excluded. Here are the details:

Doctors practice sell their practice to a bigger company and every doctor gets their profit (my client's share = 500k) in proportion to their investment. But the sale is classified as an installment sale. Major portion (400k) of the profit is paid in 2018 and the remaining amount is paid over two to three years. My client is an employee while he worked for the practice. I am trying to save 3.8% NIIT for my client. Please help..........

I am sure it was just an oversight on your part to stop the excerpt where you did. Here is the entire quote.

Gains recognized in the current year for payments received on an installment sale obligation or private annuity for the disposition of property used in a non-section 1411 trade or business

Read reg. 1.1411-4(d)(4)(i) and (ii), including the example of an excluded partnership installment sale in (i).

Thanks a bunch for the help.

Doctors practice sell their practice

What did they sell – assets, C-corp stock, S-corp stock, partnership interests?

That tiny little fact matters…