NUA QUESTION

Submitted by Scott S. on Wed, 2025-04-23 16:41

Hi!

Been learning about NUA’s and had a quick question from my research.

  1. I read somewhere that sales on NUAs are NOT subject to 3.8% NIIT tax. Where in the code/IRS publications specify this.
  2. When you sell the shares you transferred (NUA) are you subject to alt min?
  3. There is no special treatment for CA when you sell the shares correct? You’ll just be taxed at ordinary?

Thank you



Submitted by Alan - IRA critic on Wed, 2025-04-23 19:37

It’s correct that the NUA portion of share sales is not subject to the NIIT. This is documented in IRS Reg 1.1411-8 and is also indicated in the Instructions for line 5b of Form 8960. However, gain subsequent to distribution is included as investment income.

However, there is no such exemption for the AMT.

CA taxes all LT gains as ordinary income including the sale of NUA shares.

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