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Hawaii Net Investment Income

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Question
What should I include in my Hawaii net investment income?

Answer

Gross income from property held for investment to be entered here includes income (unless derived in the ordinary course of a trade or business) from:

  • Interest
  • Ordinary dividends (except Alaska Permanent Fund dividends)
  • Annuities
  • Royalties

Also, include here net income from the following passive activities:

  • Rental of substantially nondepreciable property.
  • Equity-financed lending activities.
  • Acquisition of certain interests in a pass-through entity licensing intangible property. See Regulations section 1.469-2(f)(10) for details.

Also include net passive income from a passive activity of a publicly traded partnership (as defined in section 469(k)(2)). See Notice 88-75, 1988-2 C.B. 386, for details.

Include investment income reported to you on Schedule K-1 from a partnership or an S corporation.

Also include net investment income from an estate or a trust.

Caution: Do not include here any net gain from the disposition of property held for investment. Instead, enter this amount on Net Gain.

Net gain from the disposition of property held for investment is the excess, if any, of total gains over total losses from the disposition of property held for investment. When figuring this amount, include capital gain distributions from mutual funds.

Net capital gain from the disposition of property held for investment is the excess, if any, of net long-term capital gain over net short-term capital loss from the disposition of property held for investment. Capital gain distributions from mutual funds are treated as long-term capital gains.

Net capital gain from the disposition of property held for investment is excluded from investment income. However, you may elect to include in investment income all or part of the net capital gain from the disposition of property held for investment.

To make the election, enter here the amount you elect to include in investment income. If you make an entry here and you are using an alternative tax on your capital gains (or Part VI of ScheduleD (Form N-40)), you must also reduce the amount of net capital gain eligible for the 7.25% maximum capital gains rate by the amount on this line. Therefore, you should consider the effect on your tax using the maximum capital gains tax rate before making an entry here.

Investment expenses are your allowed deductions, other than interest expense, directly connected with the production of investment income. For example, depreciation or depletion allowed on assets that produce investment income is an investment expense.

Include investment expenses reported to you on Schedule K-1 from a partnership or an S corporation. Investment expenses do not include any deductions taken into account in determining your income or loss from a passive activity.


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Article Details
Views: 691 Created on: Jun 15, 2013
Date updated: Jan 03, 2019
Posted in: States, Hawaii

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