Is inherited farm sale capital gains subject to the Net Investment Income tax?

[dnleigh]

We inherited a farm and have significant capital gains, due to the cost basis being set in 2002 when my  father in law died. (We didn't inherit it until his surviving spouse passed away in 2017).  My question is: Is this capital gain subject to the Net Investment Income Tax?

The total amount we inherited is under the federal threshold amount of 11 million...

[MinhT]

Yes, the capital gains on the sale of your inherited farm are subject to the net investment income tax of 3.8%.

Please see this IRS document for more information:

https://www.irs.gov/individuals/net-investment-income-tax

[dnleigh]

Thanks. Even though I'm filing a schedule F and materially participated in the farm business?  I'm seeing conflicting info on this....

[MinhT]

You materially participated in the farm business and income from the farm is active income not subject to the net investment income tax. But capital gains from the sale of the farm are subject to the net investment income tax.