@Anonymous_
The instructions appear to contradict or are incomplete.
Per the instructions to Form 8960
Definitions
Excluded income. Excluded income
means:
• Income excluded from gross income in
chapter 1 of the Internal Revenue Code;
• Income not included in net investment
income; and
• Gross income and net gain specifically
excluded by section 1411, related
regulations, or other guidance published in
the Internal Revenue Bulletin.
Examples of excluded items are:
• Wages,
• Unemployment compensation,
• Alaska Permanent Fund Dividends,
• Alimony,
• Social security benefits,
• Tax-exempt interest income,
• Income from certain qualified retirement
plan distributions, and
• Income subject to self-employment
taxes.
So social security is excluded for net investment income but then......
Line 13—Modified Adjusted Gross
Income (MAGI)
If you didn’t exclude any amounts from
your gross income under section 911 and
you don’t own a CFC or PFIC, your MAGI
is your AGI as reported on Form 1040 or
1040-SR. If you exclude amounts under
section 911 or own certain CFCs or
PFICs, your MAGI is your AGI as modified
by certain rules described in Regulations
section 1.1411-10(e)(1)
Since my dad had no foreign income and did not own a CFC (controlled foreign corporation) or PFIC (passive foreign investment company) the instructions for modified adjusted gross income appear to be saying his modified adjusted gross income is his AGI (adjusted gross income) and thats what the program did which is incorrect. The instructions are at best incomplete and (as are many sections of the internal revenue code) very confusing even for people who like me, worked for a living as a CPA. A person just assumes if a program like turbo tax (that has how many people reviewing it??) says something is correct, then thats the way it must be. In this case the program clearly made a mistake.
