the new medicare tax

[JenMO]

do my Mennonite clients that are 4029 exempt have to pay that extra tax (client is selling out, lots cap gain)

[mactoolsix]

Individuals claiming a 4029 SS exemption are are exempt of penalties for non-health insurance
(26 USC § 5000A - Requirement to maintain minimum essential coverage)

However, that doesn't make the income exempt from NIIT.

Is this an S corp., Partnership or Sole Proprietor? Below applies to S corp & partnerships

For the sale of a partnership or S corp, the new regulations continue to require a deemed asset sale approach, but rather than determining the gain from the sale of the membership interest and then backing out the amount of deemed asset sale gain that would be excluded from net investment income, the new guidance simply requires the seller to include in net investment income ONLY the gain from the deemed asset sale that would be included in net investment income.

Under the new regulations, you only look at the hypothetical asset gain.

Here's a link to the new regs. https://s3.amazonaws.com/public-insp...2013-28409.pdf
See page 79 - §1.1411-4(a)(1)(iii)(i)(B)

Also here's a good article about the old vs new regs.

http://www.forbes.com/sites/anthonynitti/2013/11/27/irs-issues-final-net-investment-income-tax-regulations-a-first-look-and-more/

Mike