Answer:
$532
Explanation:
The income that is considered for NIIT is the (a) lesser of the net investment income or (b) the amount by which MAGI exceeds the applicable threshold.
a. $42,000 ($26,200 interest income + $10,400 dividends + $5,400 Long-term capital gains)
b. $14,000 ($214,000 - $200,000)
Note: MAGI threshold of $200,000 for single taxpayer is applicable before they fall under the NIIT bracket of 3.8% of tax.
Net Investment Income = $14,000
Net investment income tax liability = Net Investment Income * 3.8%
Net investment income tax liability = $14,000 * 3.8%
Net investment income tax liability = $532
So, Allen's net investment income tax liability this year is $532.
