Sorry, I don't think I'm doing a good job explaining-- the LLC was a holding company that only held the C corp's stock and nothing else. I materially participated in the C corp (full time employee) and own my share of the C corp by being a partner in the LLC. If I had held the C corp's stock directly and materially participated, the proceeds from the sale of the C corp's stock wouldn't have been subject to NIIT, right (or am I misunderstanding how the material participation exception works)?
Since it was held by the LLC instead and the proceeds are passing through the LLC, would that change its handling for NIIT purposes in any way?
