What does net investment income mean on the CPA exam?
Net investment income. Interest, dividends, capital gains, rents, royalties and income from passive businesses, less the deductions allocable to them. The base for the 3.8 percent surtax.
Defined against Sec. 1411(c).
Which CPA exam sections use net investment income?
Net investment income appears in the REG section of the CPA exam.
Related terms
- personal holding company income: Mostly passive income -- dividends, interest, rents, royalties -- which, with concentrated ownership, triggers a penalty tax on undistributed amounts.
- qualified business income: The net income from a domestic pass-through trade or business, excluding investment income and reasonable compensation.
- taxable income: The figure the tax rates are applied to: gross income, less the deductions the Code allows.
- ordinary income: Income taxed at the regular graduated rates rather than at preferential capital gain rates.
- capital gain net income: Capital gains minus capital losses for the year, long-term and short-term combined.
- other comprehensive income: Gains and losses that bypass net income and sit in equity until realized, such as unrealized gains on available-for-sale debt securities and foreign currency translation.